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... data are well documented Any manipulations are stated explicitly Completeness Data is available irregularly or have missing data points Data is available historically for year intervals Data... Abbreviations and Acronyms List of Abbreviations and Acronyms 450S 450 Scenario AHP Analytic Hierarchy Process APAC Asia-Pacific APERC Asia Pacific Energy Research Centre ASEAN Association of... to be reputable and authoritative 31 SESI framework design iii Chapter Transparency: Manipulations to the data and indicators have to be well documented iv Completeness: Data should be available
ENERGY SECURITY INDEXES: A SURVEY WITH APPLICATION TO SINGAPORE CHOONG WEI LIANG, DESMOND NATIONAL UNIVERSITY OF SINGAPORE 2014 ENERGY SECURITY INDEXES: A SURVEY WITH APPLICATION TO SINGAPORE CHOONG WEI LIANG, DESMOND (B. Eng. (Hons.), NUS) A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF ENGINEERING DEPARTMENT OF INDUSTRIAL AND SYSTEMS ENGINEERING NATIONAL UNIVERSITY OF SINGAPORE 2014 Acknowledgements Acknowledgements I would like to express my sincere gratitude to Prof Ang Beng Wah, my research supervisor for his guidance throughout this research project. Without his advice and expertise, this research will not have been a success. I would also like to thank my co-supervisor A/P Ng Tsan Sheng, Adam, and Dr. Su Bin (Energy Studies Institute) for their kind advice and encouragement throughout the development of this research. Their insightful comments have helped to make this work better in many ways. Special thanks also go out to all other faculty and staff members in the Department of Industrial and Systems Engineering for making my stay enjoyable and comfortable. Their suggestions and comments have helped in one way or another during this time. Lastly, I would like to thank my family for the encouragement and unwavering support given to me throughout my journey in life. iv Table of Contents Table of Contents Acknowledgements ...................................................................................................................iv Table of Contents ....................................................................................................................... v List of Figures ..........................................................................................................................vii List of Tables.............................................................................................................................ix List of Abbreviations and Acronyms ......................................................................................... x Summary ..................................................................................................................................xii Chapter 1. Introduction .......................................................................................................... 1 1.1 Energy Security and energy security indexes .................................................................. 1 1.2 Motivation ........................................................................................................................ 1 1.3 Thesis structure and contribution ..................................................................................... 2 Chapter 2. Literature Review of Energy Security Indexes ..................................................... 4 2.1 Introduction ...................................................................................................................... 4 2.2 Review of past studies...................................................................................................... 5 2.3 Definitions and trends ...................................................................................................... 7 2.4 Changing emphasis over time ........................................................................................ 10 2.5 Other observed features ................................................................................................. 12 2.6 Energy Security Indices and trends ................................................................................ 13 2.7 Number of indicators ..................................................................................................... 15 2.8 Temporal versus spatial studies ..................................................................................... 16 2.9 Specific focused areas in index construction ................................................................. 16 2.10 Energy security index construction .............................................................................. 20 2.11 Conclusion ................................................................................................................... 24 Chapter 3. Singapore Energy Security Index (SESI) Framework Design ............................ 27 3.1 Introduction .................................................................................................................... 27 3.2 Other existing frameworks ............................................................................................. 28 3.3 SESI framework ............................................................................................................. 30 3.4 Selection of Indicators ................................................................................................... 31 3.5 Banding of indicators ..................................................................................................... 32 3.6 Weighting and aggregation ............................................................................................ 36 3.7 Evaluation of SESI methodology ................................................................................... 36 3.8 Conclusion ..................................................................................................................... 40 v Table of Contents Chapter 4. Implementation of SESI ..................................................................................... 41 4.1 Introduction .................................................................................................................... 41 4.2 Data sources ................................................................................................................... 41 4.3 Singapore energy security indicators ............................................................................. 41 4.4 Normalization ................................................................................................................ 48 4.5 Weighting and aggregation ............................................................................................ 49 4.6 Discussion of results ...................................................................................................... 50 4.7 Recommendations .......................................................................................................... 56 4.8 Conclusion ..................................................................................................................... 57 Chapter 5. Scenario and sensitivity analysis ........................................................................ 59 5.1 Introduction .................................................................................................................... 59 5.2 Scenarios and assumptions............................................................................................. 59 5.3 SESI indicators (2010 - 2035) ........................................................................................ 63 5.4 Results ............................................................................................................................ 68 5.5 Sensitivity analysis......................................................................................................... 70 5.6 Conclusions .................................................................................................................... 71 Chapter 6. Conclusions ........................................................................................................ 75 6.1 Concluding remarks ....................................................................................................... 75 6.2 Limitations of proposed framework and index .............................................................. 76 6.3 Future research topics .................................................................................................... 77 References ................................................................................................................................ 79 Appendix A. Energy security studies reviewed ................................................................... 86 Appendix B. Energy security studies with indicators or indexes ........................................ 91 Appendix C. The Energy Trilemma and Singapore's energy profile .................................. 96 Appendix D. Scenario projections for SESI ...................................................................... 107 Appendix E. Banding results for projections .................................................................... 110 vi List of Figures List of Figures Figure 2.1 Distribution of energy security studies by publication type for different time periods................................................................................................................... 6 Figure 2.2 Number of energy security studies by country/region................................. 7 Figure 2.3 Coverage of each energy security theme in energy security definition by time period. ................................................................................................................. 11 Figure 2.4 Coverage of each energy security theme in energy security definition by publication type........................................................................................................... 12 Figure 2.5 Coverage of each energy security theme in energy security definition for quantitative and qualitative energy security studies. .................................................. 13 Figure 2.6 Distribution of the number of indicators for 51 energy security studies ... 15 Figure 2.7 Number of studies focusing on each SFA in energy security index development ................................................................................................................ 19 Figure 2.8 Normalisation, weighting and aggregation methods in energy security index construction. ...................................................................................................... 20 Figure 2.9 Distribution of normalisation methods in energy security index construction ................................................................................................................. 22 Figure 2.10 Distribution of weight assignment methods in energy security index construction ................................................................................................................. 23 Figure 3.1 SESI Framework ....................................................................................... 30 Figure 4.1 SESI framework with weights ................................................................... 50 Figure 4.2 Singapore Energy Security Index (SESI). ................................................. 51 Figure 4.3 Graph of energy supply chain sub-index results (1990 – 2010). ............... 52 Figure 5.1 Economic sub-index projections ............................................................... 68 Figure 5.2 Energy system sub-index projections ........................................................ 69 Figure 5.3 Environmental sub-index projections ........................................................ 70 Figure 5.4 SESI projections ........................................................................................ 72 vii List of Figures Figure 5.5 SESI and Energy Supply Chain Sub-index: Equal weight case versus the reference case. ............................................................................................................. 74 Figure C.1 The energy trilemma ................................................................................. 96 Figure C.2 Influence diagram for energy policies ...................................................... 98 viii List of Table List of Tables Table 2.1 Normalisation versus weighting methods. .................................................. 24 Table 3.1 Comparison of existing frameworks for measuring energy security .......... 29 Table 3.2 Criteria ratings for indicators ...................................................................... 33 Table 3.3 Criteria rating results for indicators ............................................................ 34 Table 4.1 Indicators for Singapore Energy Security Index. ........................................ 42 Table 4.2 Banding scheme and weightings for the Singapore Energy Security Index53 Table 4.3 Banding results ........................................................................................... 55 Table 4.4 Ratings for SESI range ............................................................................... 56 Table 4.5 Numerical results for sub-indexes and SESI............................................... 56 Table 4.6 Numerical results for energy system sub-indexes....................................... 56 Table 5.1 General assumptions for scenarios.............................................................. 61 Table 5.2 Fuel mix of TPES for BAU/NPS and 450S ................................................ 63 Table 5.3 Numerical results for various scenarios (sub-indexes and SESI) ............... 72 Table 5.4 SESI sensitivity analysis ............................................................................. 73 Table A.1 List of energy security studies. .................................................................. 86 Table B.1 Studies incorporating specific energy security indicators and indexes. ..... 91 Table C.1 Singapore energy policies ........................................................................ 105 Table D.1 Business-as-Usual scenario (BAU) for Singapore Energy Security Index .................................................................................................................................. 107 Table D.2 New Policies Scenario (NPS) for Singapore Energy Security Index ....... 108 Table D.3 450 Scenario (450S) for Singapore Energy Security Index ..................... 109 Table E.1 Banding results for BAU .......................................................................... 110 Table E.2 Banding results for NPS ........................................................................... 111 Table E.3 Banding results for 450S .......................................................................... 112 ix List of Abbreviations and Acronyms List of Abbreviations and Acronyms 450S 450 Scenario AHP Analytic Hierarchy Process APAC Asia-Pacific APERC Asia Pacific Energy Research Centre ASEAN Association of South East Asian Nations BAU Business-As-Usual BCA Building and Construction Authority, Singapore BP British Petroleum CPS Current Policies Scenario DEA Data Envelopment Analysis DoS Department of Statistics, Singapore DTI Department of Trade and Industry, UK EC European Commission EIA Energy Information Administration EMA Energy Market Authority, Singapore ENV Ministry of Environment, Singapore ERIA Economic Research Institute for ASEAN and East Asia ESC Economic Strategies Committee, Singapore ESCAP United Nations Economic and Social Commission for Asia and the Pacific ESI Energy Security Index EU European Union GDP Gross Domestic Product GES Geopolitical energy security measure HHI Herfindal-Hirschman index IAEA International Atomic Energy Agency IEA International Energy Agency IUSESR Index of U.S. Energy Security Risk x List of Abbreviations and Acronyms ktoe 1000 tons of Oil Equivalent LNG Liquefied Natural Gas LTA Land Transport Authority, Singapore MEWR Ministry of Environment and Water Resources, Singapore MTI Ministry of Trade and Industry, Singapore NCCS National Climate Change Secretariat, Singapore NEA National Environment Agency, Singapore NPS New Policies Scenario NPTD National Population and Talent Department, Singapore OAPEC Organisation of Arab Petroleum Exporting Countries OECD Organisation for Economic Co-operation and Development PCA Principal Component Analysis REES Risky External Energy Supply SAIDI System Average Interruption Duration Index SAIFI System Average Interruption Frequency Index SESI Singapore Energy Security Index SFA Specific focused areas SGD Singapore Dollars SP Singapore Power TFEC Total Final Energy Consumption TPES Total Primary Energy Supply UNFCCC United Nations Framework Convention on Climate Change US DoJ US Department of Justice WEC World Energy Council WEF World Economic Forum WEO World Energy Outlook xi Summary Summary Energy security is an important issue for Singapore, a country which is wholly dependent on energy imports to meet its consumption needs. An interesting research question is how can Singapore’s energy security be measured? This thesis attempts to answer this through three phases: (i) a review of existing literature on the subject and tools to measure energy security, (ii) designing a framework to measure’s Singapore energy security and (iii) implementation of the framework to measure Singapore’s energy security from 1990-2010. A thorough survey of existing literature on energy security and quantitative tools to measure it (i.e. energy security indexes) is conducted in the first phase. Existing trends and features in the literature are distilled to form a comprehensive picture of what is energy security and how it is measured. The second phase involves designing a framework based on the understanding of energy security obtained together with the consideration of Singapore's energy landscape and policies. This helps to frame and design an index which is more relevant and useful to stakeholders and policymakers. The framework proposed is a three dimensional framework which looks into the economic, energy supply chain and environmental dimensions of the Singapore energy system to determine its energy security. Twenty-two indicators are selected for this index. Five from the economic dimension, twelve from the energy supply chain dimension and five for the environmental dimension. Together, they form a representative view of Singapore's energy security performance. The results from the Singapore Energy Security Index (SESI) are generated in the last phase. It shows that in the study period (1990-2010), Singapore's overall energy security performance has been fairly stable. However, further analysis reveals that this is a result of declining economic energy security offsetting improvements in the energy supply chain and environmental dimensions. A scenario analysis is carried out to project Singapore's energy security under various energy policies. It is found that energy security will remain stable under the Business-As-Usual (BAU) scenario xii Summary and will improve significantly in an alternative scenario in which nuclear energy is introduced into the energy mix. This thesis contains three contributions to the field of energy security. Firstly, trends in the definition and methods used in the construction of energy security indexes are identified through a thorough review of existing literature. Secondly, the main contribution is the design of a novel energy security tracking tool for Singapore. The last contribution is the implementation of the index and generation of historical results and future projections through scenario analysis using the proposed framework and index. xiii Introduction Chapter 1 Chapter 1. Introduction Energy security indicators and indexes are increasingly being used to quantify energy security and measure the energy security performance of various countries and regions. This introductory chapter provides an overview of the discussions on energy security and outlines the structure of the thesis. 1.1 Energy Security and energy security indexes The concept of energy security has a long history dating back to the oil embargo in 1967. During the Six-Day War, oil rich Arab countries embargoed oil exports and used oil as an "energy weapon" for political aims. In 1973, the Organisation of Arab Petroleum Exporting Countries (OAPEC), initiated another oil embargo during the Yom Kippur War. This led to the formation of the International Energy Agency (IEA) to help net oil importers through coordinating a collective response against major supply disruptions. In the earlier years, discussions on energy security centred mainly on the availability of supply and the price of fossil fuels, especially oil. However, more recently, the discussions on energy security have expanded to include more issues such as the environmental and social impacts of energy systems. The focus of the environmental aspect is the carbon emissions from the energy system. These emissions lead to global warming and climate change. Countries and organisations such as the United Nations have pledged to reduce carbon emissions to reduce the pace of climate change. Although energy security is a highly subjective notion, increasingly there are more studies that have attempted to measure energy security of a country or region by means of indicators and indexes. This allows energy security to be tracked and monitored. This can also lead to the formulation of new energy policies to arrest any decline in energy security. 1.2 Motivation Although it has been widely discussed, there is no consensus on the definition of energy security. This may be due to the context-dependent nature of energy 1 Introduction Chapter 1 security. Each country in the world has a different set of resource endowments, energy systems and policies and face unique problems and challenges in securing their energy supply. Energy producers may even consider the security of demand as part of their energy security issues. A quick search of the current literature shows that there are few comprehensive reviews apart from Chester (2010) and Winzer (2012) on definitions and Kruyt et al. (2009) and Månsson et al. (2014) on indicators and indexes. Existing studies on Singapore have been cross-country comparisons using a common set of indicators (Sovacool, 2013a). Although such studies are able to rank countries in terms of relative energy security, they are less useful for in-depth analysis for single countries. Indicators such as resource to production ratio may not be of interest to countries like Singapore which are resource poor. Hence, a customised index is required to measure what is of interest to stakeholders and policy makers in Singapore. Therefore, the goals of this thesis are to review the trends in the definition of energy security and the construction of energy security indexes in a comprehensive manner and also to propose an energy security index for Singapore, based on existing work in this area and taking into consideration its energy profile and the set of problems it faces in securing its energy supply. The indicator and index approach is adopted to quantify Singapore's energy security performance. This would help to provide a tool to track and control Singapore's energy security and enable a fuller analysis to facilitate policymaking. 1.3 Thesis structure and contribution This thesis focuses on both quantitative and qualitative analysis of Singapore's energy security. The organization of this thesis is as follows. Chapter 2 is a literature review of energy security definitions and efforts to measure energy security performance through the use of indicators and indexes. This chapter establishes the foundation on which the Singapore Energy Security Index (SESI) Framework is designed on. The framework will be described in detail in Chapter 3, including how the framework is structured and why each indicator is chosen for each particular subindex. The various steps to construct the index will be documented and the benefits of 2 Introduction Chapter 1 having such a framework will also be elaborated in this chapter. Chapter 4 constructs the Singapore Energy Security Index (SESI) using data from 1990 to 2010 based on the framework discussed in the previous chapter. The trends in the historical energy security performance of Singapore will be analysed and the implications to future energy policy making will also be discussed. In Chapter 5, various scenarios will be designed to project the future of Singapore's energy security. Sensitivity analysis will also be conducted on the weights used for aggregation in the index in this chapter to show how different weighting schemes may affect the results obtained by SESI. Chapter 6 ends with some concluding remarks, limitations of the proposed framework and index, and suggestions on future research areas on measuring energy security for Singapore and the wider region. 3 Literature Review Chapter 2. Chapter 2 Literature Review of Energy Security Indexes 2.1 Introduction Energy security is a topic that encompasses multiple aspects. It is also a topic of interest to many different stakeholders, including policy makers, businesses (especially those which are major energy consumers), and the larger community whose quality of life depends on uninterrupted energy supply. Discussions on energy security can be found in many academic publications and in government and thinktank reports. A quick search shows that there is no consensus on a widely accepted definition of energy security. Studies such as Chester (2010) and Vivoda (2010) point out that the nature of energy security is polysemic and multi-dimensional. One would therefore expect that the meaning of energy security to be highly dependent on its context such as a country’s special circumstances, level of economic development, perceptions of risks, as well as the robustness of its energy system and prevailing geopolitical issues. The development of an energy security index begins from the definition of energy security based on the goals of the study. Hence it is important to review the definitions of energy security that have been proposed and establish what is relevant and suitable for the measurement of Singapore’s energy security. In defining energy security, some researchers focus primarily on the energy supply aspect such as energy availability and energy prices (Jamasb and Pollitt, 2008; Spanjer, 2007), while others argue for a more comprehensive definition that includes also downstream effects such as the impact of energy supply on economic and social welfare (Vivoda, 2010). The definition and dimensions of energy security appear to be dynamic, and they evolve as circumstances change over time. For instance, as energy technologies advance, along with emerging developments in other fields, such as increased awareness of climate change and sustainability, the relevant facets of energy security are expected to be reshaped. There has also been increased interest in quantifying energy security using indicators and indexes. Various studies have proposed a wide variety of energy security indexes, either to compare the performance among countries or to track 4 Literature Review Chapter 2 changes in a country’s performance. Generally, in these studies, a basket of indicators are first identified based on some specific considerations or theoretical framework. With the requisite data collected, these indicators are normalised, assigned weights, and aggregated to give one or more composite energy security indexes. Again, a quick review will show that there are large variations among studies in the choice of indicators and how a composite energy security index is framed and constructed. In the literature, a systematic analysis of the different definitions and dimensions of energy security, including shifts over time in the relative importance of the various facets of energy security, is lacking. The growing use of energy security indexes for self-assessment, tracking progress or cross-country comparisons is expected to continue. Yet there is the lack of a comprehensive analysis of these indexes, such as their specific focuses and the way they are constructed. This chapter aims to review how other scholars have defined energy security and what lessons can be learnt in building an energy security index for Singapore. 2.2 Review of past studies The literature survey covers 104 energy security studies which are listed chronologically in Appendix A. They include both peer-reviewed journal papers and reports of national agencies, international organisations, and industry/professional associations. The key journals are Applied Energy, Energy, Energy Policy and Renewable and Sustainable Energy Reviews. Examples of reports are those of the International Energy Agency (IEA), Institute for 21st Century Energy of the U.S. Chamber of Commerce, World Economic Forum (WEF) and World Energy Council (WEC). The survey covers the publications from 2001 to 2014. 1 The studies are classified into three types: journal papers, official reports, and “others”. Publications under the category “others” are reports by think tanks, research institutes, and professional and business associations. The total numbers by type are 74, 12 and 18 respectively. Exactly two-thirds, or 67%, are journal papers. Official reports are primarily those of governmental or international agencies. Unlike journal papers, the reports of governmental agencies generally present the official position, and the interpretation of energy security is influenced by national obligations, concerns and interests. International agencies, on the other hand, are more concerned about 1 Prior to 2001, publications on energy security were rare, generally with one or two per year. They are therefore not considered in this study. 5 Literature Review Chapter 2 regional energy security issues. Reports under the category “others” are more varied as compared to the other two types of studies. To study possible changes on issues of interest over time, we divide the time span into three periods, i.e. 2001-2005, 2006-2009, and 2010-2014. They will be referred to as the first, second and third period respectively. Covering five and four each for each of the last two periods, they respectively account for 11, 39 and 54 studies. The average number of studies per year has increased over time, with more than ten in the third period. Figure 2.1 shows the distribution of studies by publication type. The share of journal publications has increased steadily and reached eight out of every ten studies in the third period. Interest in energy security as a research topic has therefore been growing. 100% 80% 60% Others Journal 40% Official reports 20% 0% 2001 - 2005 2006 - 2009 Time period 2010-2014 Figure 2.1 Distribution of energy security studies by publication type for different time periods. Most of the studies are country-specific, where the energy security for a specific country (or region) is analysed. Figure 2.2 shows the distribution of studies by country/region. Energy security is a concern for both developed and developing economies alike. A majority of the studies deal with large energy importers, such as China, Europe, Japan and the United States. It is also interesting to note that the countries studied vary in terms of energy endowments and their energy mix reflecting the fact that energy security is a universal concern to net energy importers. The absence of oil rich energy exporters may suggest that energy security of demand is more of a concern to them than energy security of supply. Out of the 104 studies, 83 provide specific definitions of energy security (which are analysed in the next section), and 51 cover energy security indicators and/or indexes. The publications in each case are indicated in Appendix A. 6 Literature Review Chapter 2 Malaysia, 1 Turkey, 2 Thailand, 3 Lithuania, 3 EU/Europe, 17 Japan, 3 OECD, 5 UK, 6 APAC Countries, 6 US, 12 China, 10 Figure 2.2 Number of energy security studies by country/region. 2.3 Definitions and trends Numerous definitions of energy security have been offered by researchers and policy makers since as early as the 1973 world oil crisis. There has been some broad agreement with what it should cover but no consensus on what it exactly should be. Variations can be observed among the definitions given in the studies in Appendix A. Changes in emphasis over time, as a result of changes in the global energy landscape, are expected. These are issues studied in the sections that follow. 2.3.1 Definitions of energy security Based on the 83 energy security definitions, our review confirms that energy security is indeed a highly context-dependent concept. Apart from several key ideas that are normally present, there is no widely accepted definition. From these definitions and the corresponding studies, we are able to identify the following seven major energy security themes or dimensions: Energy availability, infrastructure, energy prices, societal effects, environment, governance, and energy efficiency. The themes employed in each definition or study is indicated in Appendix A. The coverage differs among studies and few studies include all the seven themes. The seven themes are elaborated below. Energy availability: Diversification and geopolitical factors are key issues that determine energy availability. Through diversification of sources, energy importers can reduce and better mitigate the risks of import disruptions. Concerns on geopolitical issues include events such as outbreaks of wars, destabilized regimes or regional tensions which can lead to supply disruptions. Energy supply diversity can take several forms. A country which imports its energy needs from many different 7 Literature Review Chapter 2 countries has high source diversity. A country with large land area has higher potential for spatial diversity as it can distribute energy facilities across different sites and reduce the impact of critical incidents. Another source of spatial diversity is the promotion of distributed power systems. A country can enhance energy mix diversity by having a more balanced energy supply by energy type. For countries that rely on renewable energy sources which are intermittent, technology diversity is an important consideration. The transport routes taken by energy imports can be diversified to enhance transport route diversity. One way to reduce such risks is to reduce imports that pass through known chokepoints. 2 Infrastructure: Infrastructure is integral in providing stable and uninterrupted energy supply. Facilities related to energy transformation include oil refineries and power plants. Distribution and transmission facilities include pipelines, electricity transmission lines, sub-stations and energy storage facilities. Investments on these facilities ensure that sufficient amount of energy is available in the short and long terms. The reliability of such facilities is crucial to prevent shortages or blackouts. With the use of supervisory control and data acquisition systems to manage power systems, infrastructure is increasingly exposed to cyber-security risks (Zetter, 2011). 3 The need for adequate and robust infrastructure with spare capacity is also essential for “uninterrupted physical availability of energy products on the market” (EC, 2001). Similar to strategic stocks, good infrastructure is a prerequisite to stable supply of energy supplies and an important component of “economic energy security” (Intharak et al., 2007). Energy prices: Energy prices determine the affordability of energy supplies and have a number of dimensions such as the absolute price level, price volatility and the degree of competition in energy markets. As crude oil is traded in US dollars internationally, exchange rates and purchasing power of different currencies play a role in determining how much a country and its people pay for energy imports. Volatile prices of fossil fuels can cause problems in securing energy supplies and affect the ability of policymakers to plan for capacity expansion and other shorter 2 For instance, EIA (2012) identifies seven world oil transit chokepoints with about half of the global world production passing through these choke points each year. Military conflicts or other situations that result in the closure of one or more of these choke points will have disastrous consequences to energy importers. 3 An example is the Stuxnet worm that was detected in Iran’s nuclear power plants in September 2011. It was reported that other countries affected were Indonesia, India, Azerbaijan and the US (Zetter, 2011). 8 Literature Review Chapter 2 term measures. Most studies emphasize the importance of energy prices as part of the energy security equation (Bielecki, 2002; Brown and Sovacool, 2007; Vivoda, 2012). Societal Effects: As energy is a basic necessity of life, social welfare has been included in energy security definition in some studies. Societal concerns are energy poverty where certain segments of the population are denied the basic energy services. There may be acceptability issues in which communities oppose energy projects that may cause damage to their living environment. Lesbirel (2004) posits that one of the goals of energy security is to “insure against the risks of harmful energy import disruptions in order to ensure adequate access to energy sources to sustain acceptable levels of social and economic welfare”. The Center for Energy Economics (2008) emphasizes that energy security should ensure that “the economic and social development of the country is not materially constrained.” The UK Department of Energy and Climate Change (2006) stresses on the social equity aspect of energy security, emphasizing on the issue of “fuel poverty”. Environment: Sustainability and environmental issues are closely associated with energy. The combustion of fossil fuels contributes to global warming and air pollution. Other environmental risks associated with energy are inundation of forests as a result of hydropower projects or oil leaks and spills during crude oil exploration or transportation. The European Commission’s green paper on security of energy supply (EC, 2001) highlights the importance of environmental concerns and sustainability in energy security. Pasqualetti and Sovacool (2012) also emphasize the importance of “provision of available, affordable, reliable, efficient, environmentally benign, properly governed and socially acceptable energy services” for energy security. Governance: Sound government policies help to hedge against and mitigate short-term energy disruptions. Forward-looking governments support the effective planning of ensuring long-term energy security. Policies related to energy taxes and subsidies also affect energy security. Increasingly, countries are engaging in energy diplomacy with foreign policies geared towards ensuring energy supplies from exporting regions. In addition, the government is the key information gatherer and high quality data facilitates large scale planning for energy security. The government’s role in policymaking, regulatory process, diplomacy and information collection has been highlighted in Department of Energy and Climate Change (2006) and Goldthau and Sovacool (2012). 9 Literature Review Chapter 2 Energy Efficiency: Technologies, systems and practices that improve energy efficiency help to reduce energy needs and improve energy security. The inverse of energy efficiency is energy intensity, and lowering energy intensity through various means similarly helps to improve energy security. For example, a more energy intensive industry such as steel making will be more adversely affected by energy disruptions or high energy prices compared to one that is less energy intensive. Kemmler and Spreng (2007) include “promoting energy efficiency and reducing energy intensity” as a main policy to tackle energy security problems. Hughes (2009) also advocates reducing energy use as one of his 4 'R's (review, reduce, replace and restrict) of energy security. Of the 83 energy security definitions, it is found that energy availability is included in 82 (99%), infrastructure in 60 (72%) and energy prices in 59 (71%). The corresponding figures for environment and societal effects are 28 (34%) and 31 (37%) respectively. The least important themes are governance and energy efficiency which are included in 21 (25%) and 18 (22%) respectively. Based on these results, the ranking of the seven themes in terms of importance and relevance in descending order is energy availability, infrastructure, energy prices, environment, societal effects, governance and energy efficiency. The fact that energy availability tops the list, followed by infrastructure and energy prices, is probably not surprising. What is more interesting is that the remaining four themes are taken into account in a reasonable large number of definitions. 2.4 Changing emphasis over time It is expected that with changes in the world energy, economic and geopolitical landscape, national focus and concerns and hence the perception of energy security are affected. Although our survey covers only slightly more than ten years, it is still of interest to study possible changes with regards to the emphasis on the energy security themes. Figure 2.3 shows the percentage of the definitions which include each theme by time period. The importance of energy availability has changed little over time. It is taken into account in nearly all definitions in all time periods. Infrastructure is high on the list in the first time period. Energy prices display a rising trend, which is linked to increases in international oil prices. Environmental issues are covered in only one out of the 11 definitions in the first period but in almost one in every two definitions in the third period. This development is particularly interesting as it shows the growing 10 Literature Review Chapter 2 importance given to the environmental dimension, especially to climate change, in energy security discussions. The figure for the societal effects drops from the first to the second period, after which a reversed trend is observed. Governance and energy efficiency are covered in few or none of the definitions in the first period, but they are included in about one-third of the definitions in the third period. 100% 2001-2005 2006-2009 80% 2010-2013 60% 40% 20% 0% Energy availability Infrastructure Energy prices Environment Societal effects Government Efficiency Figure 2.3 Coverage of each energy security theme in energy security definition by time period. From the above, energy availability is without doubt the top consideration in energy security definitions. At the same time, the number of themes or dimensions that are incorporated has increased over time. The coverage has become more comprehensive and encompassing, and issues related to the environment, governance and energy efficiency have gained in importance. This development indicates that while ensuring a secure energy supply remains utmost important, there is a growing need or awareness to utilise energy resources in an environmentally-friendly and prudent way as well as with good governance. What is incorporated in an energy security definition generally dictates the scope and focus of an energy security study. It may be concluded that energy security has increasingly been evaluated in a most holistic and integrated manner. At the same time, it is easy to see that there are close linkages between some of the seven energy security themes, for instance, the trade-offs between energy supply and the environment dimension, and between energy supply and the society effects. Some of these issues will be discussed in Appendix C. This means, increasingly, the analysis of energy security calls for the adoption a systems approach or viewpoint. 11 Literature Review Chapter 2 2.5 Other observed features Emphasis on energy security themes in energy security definitions may be different between official reports and journal and other publications. The definitions from 2001 to 2013 are stratified accordingly and the results are shown in Figure 2.4. It is observed that the differences are small. Less emphasis is given to the environment and energy efficiency dimensions in official reports, and it is possible that these two issues are considered under other government portfolios and are looked into separately. Relatively, official reports are more concerned with infrastructure issues and societal effects which appear to be reasonable. Although not shown in Figure 2.4, there is a strong preference for quantitative studies among official reports and energy security indicators or indexes are proposed in all these reports. 4 100% Official reports 80% Journal and other publications 60% 40% 20% 0% Energy availability Infrastructure Energy Prices Environment Societal Effects Government Efficiency Figure 2.4 Coverage of each energy security theme in energy security definition by publication type. The 84 energy definitions can also be grouped into two types: in quantitative studies and qualitative studies of energy security which respectively account for 51 and 32 of the definitions. Quantitative studies are those in which indicators or indexes are proposed to track energy security performance. One would expect that in order to quantify energy security, the focus of a quantitative study is more likely to be on attributes which are measurable, such as energy prices and energy intensity. On the other hand, qualitative studies may explore issues such as geopolitics and governance which are difficult to quantify. The results obtained, as shown in Figure 2.5, indicate that the percentages for both quantitative and qualitative studies are quite similar for each theme, and there is no strong evidence to suggest that the themes considered in quantitative studies are different from those in qualitative studies. One could 4 The results reported here are based on only seven official reports. Due to the small sample size, they must be interpreted with caution. 12 Literature Review Chapter 2 therefore treat quantitative studies as extensions of qualitative studies with appropriate indicators or proxies used to represent factors that are qualitative in nature. 100% Quantitative 80% Qualitative 60% 40% 20% 0% Energy availability Infrastructure Energy Prices Environment Societal Effects Government Efficiency Figure 2.5 Coverage of each energy security theme in energy security definition for quantitative and qualitative energy security studies. 2.6 Energy Security Indices and trends Using energy security indicators or indexes to gauge energy security performance or risk of a country has grown in popularity. It is often studied using a basket of indicators (or metrics) that represent the various dimensions it encompasses based on a specific framework. 5 Each of these indicators is given a certain weight according to its perceived importance and an appropriate aggregation technique is then used to combine them to give an index. The energy security indexes derived in this way are composite indexes. 6 A number of organisations and national energy agencies have created energy security indexes which are used for policy evaluation and analysis. The “Index of U.S. Energy Security Risk” and “International Index of Energy Security Risk” in Institute for 21st Century Energy (2012a, 2012b) are examples of such indexes. There is a high degree of subjectivity in energy security index construction. The accounting framework used, including the choice of indicators and the weights assigned to them, can be fairly arbitrary. In some studies, inputs such as through 5 Examples of indicators which are commonly used in these studies are energy intensity (the ratio of primary energy consumption to GDP), international oil prices, diversity measures for sources of energy supplies or fuel mix such as the Herfindahl-Hirschman index (HHI), and carbon emission indicators. 6 See, for example, Dobbie and Dail (2013); Nardo et al. (2008) on composite index construction. 13 Literature Review Chapter 2 surveys or expert opinion are sought. There are often issues related to data availability and quality. Despite these drawbacks and difficulties, some studies point out that the indexes are useful as an input for a number of purposes, such as country self-assessment, tracking progress, scenario analysis and cross-country comparisons. For example, a country can use the index to quantify and track the impacts of various developments, such as discovery or development of a new and major energy source, increases in international oil prices, energy diversification and energy efficiency improvement effort. Attempts to measure energy security performance using indicators and indexes is reported in 51 out of the 104 energy security studies shown in Table 1. The number of such studies has increased over time. Of the 42 energy security studies published in 2008 or earlier, 13 (or 31%) deal with some energy security indicators or indexes. The corresponding figure for the 62 post-2008 studies is 38 (61%). This growing interest in energy security assessment using some quantitative measure is in line with what has been observed in several other areas of energy studies, such as in economy-wide energy efficiency assessment (Ang et al., 2010). Publications in Appendix A that deal with energy security indicators and indexes are reproduced in Appendix B, in which a number of features of interest are shown. The second column of the table gives the name of the energy security indicator or index as it is given in the source. The third column summarizes the energy security dimensions or issues covered. From these two columns, it can be seen that great diversity exists among studies on how energy security indicators/indexes are named and the areas of focus in their development. For example, the study by the UK Department of Trade and Industry (DTI, 2002) focuses on market issues and forecasts, whereas the Institute for 21st Century Energy (2012b) studies energy security with eight focused dimensions. These diversities lead to very low comparability among studies. Even for the same country, different conclusions would be drawn from different studies. Other features summarised in Appendix B are the number of indicators used, type of study (time-series or spatial), specific focused areas in index construction, and the methods used in composite index construction. All these features are discussed in the sub-sections that follow. 14 Literature Review Chapter 2 2.7 Number of indicators As shown in Appendix B, the number of energy security indicators used ranges from one to as many as 68 7. The distribution is shown in the plot in Figure 2.6 where each dot represents a study. About 75% of the studies employ not more than 20 indicators. Studies with over 40 indicators include Augutis et al. (2011) and Augutis et al. (2012) in which 61 and 68 indicators are presented respectively. The relatively large numbers are the use of very fine indicators for each energy technology. In Scheepers et al. (2007), 63 indicators are presented as the EU standards for studying energy supply security. At the other extreme, studies with a handful of indicators tend to use complex indicators that take in multiple data points. An example is the geopolitical energy security measure (GES) in (Blyth and Lefevre, 2004) which combines market concentration risk, political stability and market liquidity into one measure. Another is the Risky External Energy Supply (REES) indicator proposed by Le Coq and Paltseva (2009) which is based on import fuel shares, fungibility of imports, political risk, distance between supplier and consumer countries, and import dependency. Figure 2.6 Distribution of the number of indicators for 51 energy security studies With very few indicators, the energy security index is generally very sensitive to changes in any of the indicators. A sudden change in an indicator may lead to a large swing in the index and this may lead to the issue of index stability. Conversely, having too many indicators may cause minor changes to be drowned out by the majority of unchanging indicators. In the literature, the more widely accepted practice seems to be using a representative set of indicators that can produce a broad overview of the energy security situation. This provides a balance between stability and sensitivity of the index. A basket of 10 to 25 indicators looks reasonable, as this translates into an average weight ranging from 4% to 10% for each indicator (assuming all the indicators are assigned equal weight). In practice, the appropriate or “ideal” number will depend on, among other factors, the scope and complexity of a 7 In Table 2, Sovacool (2011) listed 200 energy security indicators; however these were not implemented in totality for a single country or region. 15 Literature Review Chapter 2 study, such as whether sub-indexes are constructed on top of the overall energy security index. For example, Institute for 21st Century Energy (2012a) uses 34 indicators. Other than the overall “Index of U.S. Energy Security”, the study also provides four sub-indexes, respectively for the geopolitical, economic, reliability, and environmental dimensions. Data availability and quality is another determining factor. In ERIA (2012), which deals with energy security in East Asian countries, data are not available for some of the indicators for a number of countries. 2.8 Temporal versus spatial studies Temporal and spatial are two main types of studies. In the former, energy security is evaluated for two or more years and changes over time can be studied. In the latter, comparisons are made between countries and conclusions between countries can be analysed. Temporal studies and spatial studies in our survey are about equal in number, or 29 and 27 respectively. It is found that there is no significant difference in the number of indicators used for both types of studies. Seventeen studies include both temporal and spatial analyses. In these studies, it is possible to discern whether countries are merging or diverging in energy security performance. The International Energy Security Risk Index in (Institute for 21st Century Energy, 2012b) is one such study. Fifteen studies include projections or scenarios to study energy security for the future. In some studies projections are made based on the IEA World Energy Outlook reference scenarios. 8 Others such as the ECOFYS report (Greenleaf et al., 2009) design specific baseline and policy scenarios to predict the effects of different policies on future energy security performances. 2.9 Specific focused areas in index construction As already pointed out, energy security indexes are often constructed with specific areas of concerns. For example, a country-specific study tends to focus more on issues that are relevant to the country while a multi-country study will deal with issues that are of general concern. For simplicity, we shall refer to the primary concerns that a study takes into account in index construction as “specific focused areas” (SFAs). We have made an attempt to identify SFAs based on the indicators and indexes in the surveyed studies. Five such areas can be identified and we shall refer to them as SFA-1 to SFA-5, where SFA-1 focuses on 4As (see below), SFA-2 8 The reference scenarios given in various editions of IEA World Energy Outlook may be referred to in these studies. The 2013 reference scenarios can be found in IEA (2013). 16 Literature Review Chapter 2 on specific energy supply, SFA-3 on the economic dimension, SFA-4 on the environmental dimension, and SFA-5 on the social dimension. It comes as no surprise that these SFAs are closely linked to the themes on energy security definitions identified in Section 3. In fact this serves to highlight the efforts to move beyond qualitative definitions to energy security quantification. A description of each SFA follows. The 4As in SFA-1 refers to availability (availability of energy resources), accessibility (issues such as geopolitical, geographical, workforce, technological and other constraints that limit the extract of energy resources), acceptability (the environmental concerns such as energy-related carbon emissions and the environmental impacts of energy systems), and affordability (closely linked to energy prices). Since its introduction in Intharak et al. (2007), SFA-1 has been adopted in a number of other studies. SFA-2 focuses primarily on individual energy sources. The study by Le Coq and Paltseva (2009), which deals with the external energy security supply in the European Union, is an example. In this study, a Risky External Energy Supply Index was calculated for each fossil fuel type. These indexes allow analysis of energy security issues surrounding each energy type and this simplifies the identification of threats. An aggregate index for total primary energy supply can be formed by weighting the indexes of individual energy sources. As increases in energy prices will inevitably have an economic impact, many energy security indexes include an economic dimension (SFA-3). To some extent, this is similar to the affordability dimension of SFA-1. However studies that are classified under SFA-3 are generally broader and have more economic-related indicators. For instance, one such study, Streimikiene et al. (2007), has a total of 11 indicators for the economic dimension, including the aggregate energy intensity, energy supply efficiency, and energy intensity of various economic sectors. With the growing importance of sustainability, environmental and sustainability indicators have increasingly become part of the energy security consideration and environmental concerns (SFA-4) have become a focused area of energy security indexes in some studies. In the energy security index proposed by Sovacool (2013b), environmental sustainability is included as a dimension and within the dimension are indicators on land use, water, climate change and pollution. 17 Literature Review Chapter 2 Social issues (SFA-5) are important in countries where energy poverty or electricity connectivity is a major concern. In constructing an energy system assessment for measuring the sustainability of the Greek energy system, AngelisDimakis et al. (2012) use three indicators to form the social dimension. The indicators are the share of households with access to commercial energy sources, the share of household income spent on energy, and the share of household expenditure spent on energy for each income group. Apart from the five SFAs, there are other dimensions or perspectives that are associated with some studies. For completeness, we introduce SFA-O as the category “others” in which the areas of concern are not covered in the five SFAs. These areas include, for example, the crisis capability and demand and supply dimensions in Scheepers et al. (2007), the root cause and market structure approach in Greenleaf et al. (2009) and Wu et al. (2012) in which the indicators are simply divided into energy supply security and energy using security. Based on the above classification, the SFAs for each of the 53 studies in Appendix B have been identified and are shown in the table. More than one SFA may be covered in the construction of an energy security index. For example, in Intharak et al. (2007), the primary area is SFA-1. This, however, entails a special consideration given to the economic dimension (SFA-3). In the Energy Sustainability Index introduced by the World Energy Council (WEC, 2012), consideration is given to the economy (SFA-3), environmental (SFA-4), social (SFA-5), and other factors (SFA-O) such as political strength. Where there is a distinction between SFAs in terms of importance in a study, the most or more important one is denoted as “p” (primary) while the other as “s” (secondary) in Appendix B. Based on the above classification, the tally for the six SFAs is shown in Figure 2.7. Ignoring SFA-O, economic dimension (SFA-3) is the most important focused area, followed by environmental concerns (SFA-4), 4As (SFA-1), energy supply (SFA-2), and the social aspect (SFA-5), in descending order. Further analysis shows some evidence that the focused areas as captured by SFAs in a study are dictated by the concerns and priorities of the stakeholders of the study. For instance, the 4As concept in SFA-1 is usually used in cross-country comparisons as it compares countries across various dimensions for a balanced analysis. Studies with SFA-2 normally deal with fossil fuels, in particular oil and natural gas, and hence involve major oil and gas importers, or countries that depend on other major energy sources such as nuclear energy in some cases (Augutis et al., 2011; Jewell, 2011). 18 Literature Review Chapter 2 The relatively large number of studies associated with SFA-4 validates our earlier findings that the environmental dimension is increasingly given more attention in energy security assessment. The social dimension (SFA-5) is usually associated with countries which have a less advanced energy system where energy poverty is a major problem. 35 30 25 20 15 10 5 0 Figure 2.7 Number of studies focusing on each SFA in energy security index development The foregoing shows the great diversity of studies dealing with energy security indicators and indexes in terms of focused areas. The way in which an energy security index is constructed ultimately determines what it measures and constitutes and what are being left out. If care is not taken to ensure a comprehensive index is produced, certain energy security problems might not surface from the analysis of such an index. Indexes can also be crafted in such ways that further the interest of certain groups. For example, environmentalists would focus more on SFA-4, whereas business interests would argue that SFA-3 should be given a higher priority. It is therefore important to define the energy security issues to be analysed, i.e. how energy security is defined as dealt with in earlier sections, to ensure that a study is meaningful and can adequately serve the intended purposes in index construction. We can also draw a preliminary conclusion from the analysis of SFAs which is that the discussion of energy security does not depart far from the economic dimension (SFA-3) and its impact on the environment (SFA-4). This brings about the issue of the “energy trilemma”, namely energy security, economic competitiveness, and environmental sustainability. 9 Apart from that, many studies go beyond the energy trilemma and include other aspects of concern to stakeholders, such as 9 The energy trilemma is discussed in Appendix C. 19 Literature Review Chapter 2 political stability (Onamics, 2005), health (ESCAP, 2008), and crisis response (Scheepers et al., 2007). 2.10 Energy security index construction Having framed the energy security definition and SFAs, selected the appropriate indicators and collected the requisite data, three additional steps are needed to arrive at a composite energy security index. They are (a) normalising the indicators, (b) weighting the normalised indicators, and (b) aggregating the normalized indicators. Depending on the methods chosen, these three steps may involve a series of computations, during which adjustments and refinement may be made to the index construction framework. The methods that can be applied in each step are summarised in Figure 2.8. Additional information about these methods can be found in Nardo et al. (2008). From our literature survey, normalisation is dealt with in 28 studies, and weighting and aggregation in 30 and 31 studies respectively. These studies are indicated in Appendix B in which some related information is also provided. 10 Figure 2.8 Normalisation, weighting and aggregation methods in energy security index construction. 10 It is observed that in some studies normalisation is skipped. In a number of studies, the indicators are normalised but not weighted and aggregated to form indexes. 20 Literature Review Chapter 2 2.10.1 Normalization The selected indicators usually have different units and are on different scales. Transformation is needed before they can be aggregated to form a composite index. A common practice is through normalisation using one of the following three methods: Min-max, distance to reference, and standardization. The min-max method involves taking the maximum and minimum values observed to form a scale, following which other values are placed with reference to these values. An advantage of this method is its ability to gauge performance based on the best and worst performance, while a drawback is the need to recalibrate when additional data points are added. The distance to reference method measures the deviation of an indicator from a benchmark. Different benchmarks may be chosen as reference points and comparisons are straightforward since the focus is on the distance from the benchmark. A drawback is that the results may be very sensitive to the benchmark chosen. In the standardization method, the indicators are often normalised through the well-known z-transformation where scaling is based on deviation from the mean. This method is attractive when comparisons are made among countries. The drawbacks are that the sample size should be sufficiently large and recalibration is needed when new data points are added. The breakdown by normalisation method for the 28 studies is shown in Figure 2.9. The min-max method is the most popular method. As an example, Cabalu (2010) calculates the relative indicators for gas intensity of countries using this method. The second most popular method is the distance to reference method, followed by standardization. The study by the Institute for 21st Century Energy (2012a) takes the 1980 value as reference for each indicator, and Sovacool and Brown (2010) use the z-score method. Eleven of the 28 studies, or 39%, use some other methods. For example, one such method, proposed by Augutis et al. (2011), involves constructing a scale that determines the normal, pre-critical and critical state for each indicator. It may be concluded that energy security indicators has been normalised in a number of different ways and none of them has really played a dominant role. 21 Literature Review Chapter 2 Others 24% Min-Max 44% Standardization 8% Distance to reference 24% Figure 2.9 Distribution of normalisation methods in energy security index construction 2.10.2 Weighting The weights of the indicators can be assigned via a number of methods. It can be done based on expert opinions or other subjective procedures. The inputs of experts or stakeholders are sought through various knowledge elicitation methods such as surveys, interviews or through more established methods such as the Delphi method. Weights can also be computed using specific algorithms and the data collected for the indicators. In this way subjective opinions are not introduced but a common criticism of such methods is that the volatility of a certain indicator may not correspond to its importance. More specifically, in Figure 2.8, the first or equal weights method is simple but there is no differentiation in importance of indicators. The fuel/import share method takes into account the relative importance of each fuel in energy mix or imports but it is clearly not suitable for non-fuel indicators. The principle component analysis (PCA) method corrects overlapping information between correlated indicators but the importance of indicator is not considered. Analytic hierarchy process (AHP) is based entirely on expert opinion. In data envelopment analysis (DEA), a benchmark is established to measure various countries, however it is less useful for analysis of a single country or only a few countries. Figure 2.10 shows the breakdown by weight assignment method for the 30 studies. Assigning equal weights to all indicators is the most common and it accounts for over a third of the studies. Quantitative methods such as the fuel consumption or fuel import share and PCA are also quite popular, and they altogether make up another one third of the studies. AHP, DEA, and all other methods account for the remaining one-third. Again, the preferred weighting method in the literature varies substantially among studies. The fact that assigning equal weights is most widely 22 Literature Review Chapter 2 adopted does not necessarily mean that it is the best method. Rather, this is more of an indication that it is convenient to treat as the “default” method due to its simplicity or the difficulty of coming up with an alternative that is superior and acceptable to all stakeholders. Others 17% Equal weights 38% DEA 3% AHP 4% PCA 10% Fuel/Import share 28% Figure 2.10 Distribution of weight assignment methods in energy security index construction 2.10.3 Aggregation Aggregation involves combining the weighted indicators into a composite index. In some studies, indicators are first combined into sub-indexes, which are further aggregated into a main index using another set of weights for the sub-indexes. The simplest and most popular aggregation method is the additive aggregation method, where the indicators are first multiplied by the weights assigned and then summed to arrive at the index. It is used in 83% of the energy security indexes. The remaining 17% of indexes use other some other methods including, for example, the root mean square of indicators to produce the index. Concerns about aggregation that have been brought up include loss of information and increasing the complexity of energy security issues through artificial manipulations. 2.10.4 Other index construction issues Table 2.1 shows the linkages between normalization and weighting methods for the surveyed studies. It shows the preference among researchers in using these two groups of methods together. The most striking feature is the great diversity observed. There is clearly no consensus as to which is the “best” combination of normalisation and weighting methods. Even the most popular pairing, i.e. PCA normalization and equal weights, is only marginally more than several other combinations. 23 Literature Review Chapter 2 Table 2.1 Normalisation versus weighting methods. How these methods have been used in energy security index construction, where the numerical value denotes number of studies. Normalisation method Weighting method Distance to Min-Max reference Standardization Others Equal weights 2 - 2 5 Fuel share/ Import share 1 - - 3 PCA 3 - 1 - AHP 1 - - - DEA 1 - - - Others 2 2 1 1 There are many indexing methods which have been adopted in other fields but not in energy security index construction. They include indicators above and below the mean and percentage annual differences over consecutive years for normalisation, unobserved components methods, budget allocation process, public opinion and conjoint analysis for weighting the indicators and geometric aggregation and non-compensatory multi-criteria approach for aggregation. There is considerable scope for further research and development with regards to the methodological aspect in energy security index construction. Another finding from this survey is that as energy security indexes are still novel developments, much of the work is still centred on and limited to proposing indexes and having various scenarios to project energy security performance in the future. A possible area that has not been studied in depth is the robustness and sensitivity of the proposed indexes. Dobbie and Dail (2013) propose using simulations to test these properties of the indexes. Through such exercises, proposed energy security indexes can become more robust and sensitive to changes in the energy landscape. 2.11 Conclusion Energy security is an emerging field of study. The number of studies has grown rapidly in recent years. In the literature, many definitions of energy security have been proposed. There is also a growing emphasis on the use of energy security indicators and indexes. In this chapter, 104 studies have been surveyed with a focus 24 Literature Review Chapter 2 on how energy security has been defined, its scope and dimensions, and energy security indicators and indexes. The key findings are as follows. There are great diversities among the 83 definitions found. Based on these definitions, seven major energy security themes have been identified. Out of them energy availability is the most important theme in the literature. In addition, the scope of energy security has expanded and issues such as environmental, governance and energy efficiency which were normally not considered in earlier years are now often covered. Energy security has therefore been viewed and treated in a more holistic manner in more recent years. There are 53 studies that deal with energy security indicators. The number of indicators used varies significantly, from a few to more than 60. About two-thirds of the studies employ not more than 20 indicators. About one-third of the surveyed studies published in 2008 or earlier incorporated energy security indicators. The proportion increases to about two-third for the post-2008 studies. There are two major types of studies that use energy security indicators: those that deal with performance over time and those that compare performances among countries. In the literature, the numbers of studies are about the same for both types. There is no significant difference in the number of indicators used for both types of studies. A number of studies include projections or scenarios to predict energy security for the future. Based on the literature, five major “specific focused areas” have been defined based on which energy security indexes have been constructed. The economic dimension is found to be the top focused area. Interesting, the environmental dimension fares quite well and ranks second. This shows the strong linkages among the three goals of the energy trilemma in the context of energy security index construction. In terms of the steps in index construction, the analysis on the normalisation, weighting, and aggregation methods used show great diversities among studies. The min-max method in normalisation is found to be only one that is more commonly applied. Diversities in the choice of indexing methods, number of indicators used and specific focused areas lead to very low comparability among studies on energy security indexes. Some recommendations can be made based on the findings. First, the definition of energy security should be revisited periodically to ensure that it remains relevant. With ever changing environment and new developments in the energy field, energy security as a context-dependent concept will need to be revised regularly to reflect changes in priorities or newly emerged threats. Second, in constructing energy 25 Literature Review Chapter 2 security indexes, the first step should be to analyse the energy system of the country or region being studied carefully to ensure that the approach and the indicators selected are appropriate. This is particularly important when comparing countries with very different social, economic and energy systems. Third, further research is needed to study the impacts of different indexing methods on energy security index construction and, where possible, to devise guidelines on energy security index construction. Fourth, the robustness and sensitivity of the proposed energy security indexes should be evaluated through simulation studies. Lastly, energy security should not be considered in isolation when formulating energy policies, competing energy goals forming the energy trilemma should be considered to ensure that balanced and sustainable energy policies are implemented. This chapter has form the basis on which Singapore’s energy security11 can be defined and also the foundation on which the indexing framework for Singapore’s energy security index can be designed. 11 Some researchers have measured Singapore’s energy security through cross-country studies. Some of these studies are listed in Table 3.1. However, an in-depth study at the national level for Singapore is still lacking and hence this thesis hopes to bridge the gap. 26 SESI framework design Chapter 3 Chapter 3. Singapore Energy Security Index (SESI) Framework Design 3.1 Introduction Since energy security is a complex issue and its definition is context dependent, it is difficult to measure a country's energy security with a single indicator. Thus, composite indicators are usually used for this purpose. These are formed by aggregating several energy indicators using weightings of the individual indicators. These indicators are drawn from the various dimensions that are associated with energy security. Commonly associated dimensions are the economic and environmental dimensions, however Institute for 21st Century Energy (2012a) has considered the geopolitical dimension whereas Angelis-Dimakis et al. (2012) considered the social dimension. It can be said that the dimensions considered are largely based on the research goals of the specific studies. A background study on Singapore’s energy profile and policies was done to establish the requirements and concerns about Singapore’s energy security. This information can be found in Appendix C. This study produced many insights to the design of the following framework. An example of a takeaway from the study is that certain indicators such as reserves to production ratio which have been used in other studies are not relevant to Singapore due to its lack of indigenous resources. Hence other indicators relating to its import security should be used instead. There are also several features that are unique to Singapore which should also be considered, such as its status as a regional oil refining hub. Furthermore, the background study has also highlighted areas such as what policymakers in Singapore consider more important and monitor as key performance indicators. This will make the proposed index more acceptable to stakeholders. Having conducted the background study, the next step is to design the index. The construction of an energy security index usually follows this procedure: (i) a framework is designed to structure the selection of indicators, (ii) the selected indicators are normalised to facilitate aggregation, (iii) the indicators are weighted according to their perceived importance and (iv) they are aggregated to form a 27 SESI framework design Chapter 3 representative energy security index. In the following sections, we propose a threedimensional framework and steps to construct a national energy security index. 3.2 Other existing frameworks There are various frameworks that have been used to measure the energy security or sustainability of national energy systems. It can be said that the design of these frameworks have largely been arbitrary, without any standardization or reference to existing frameworks. A review of existing frameworks, as shown in Table 3.1, show the objectives of the frameworks are dissimilar and this leads to different framework structure and indicators selected. It can also be observed that most do not adopt a supply-chain approach to measure energy security. A supply chain framework is one that selects and arranges indicators along the energy supply chain. This can help to identify deficiencies and insecurities along the supply chain. Several other issues with some of the frameworks can also be highlighted. Firstly, among the five studies reviewed, three do not have sub-indexes that show the performance of each dimension. This may pose problems when there are many indicators under each dimension or category. An indicator-by-indicator comparison between two countries or time periods is needed when such sub-indexes are absent. Such an analysis would also be tedious and time-consuming. Having subindexes is useful in painting a general picture of the energy security situation across dimensions and time. Secondly, the importance of the energy supply chain and the power sector are not emphasized in these frameworks. Weak links within the energy supply chain are not highlighted through analysis of these frameworks. Even for the frameworks with sub-indexes, policymakers can only gauge the energy security as a whole rather than pinpointing which areas in the energy supply chain need further attention. Thirdly, dimensions chosen may not be well represented. In the WEC Energy Sustainability Index, under the energy equity dimension, there are only two indicators, affordability of retail gasoline and affordability and quality of electricity relative, this may result in this dimension experiencing a high level of volatility especially when the price of crude oil, which affects both indicators in that dimension, fluctuates. Another point is that one of the indicators, the affordability of retail gasoline, may be improved by increasing existing subsidies which may not be desirable. The review shows that existing frameworks may be inadequate to reflect the importance of the energy supply chain in industrialized countries, therefore the SESI framework is proposed. 28 SESI framework design Chapter 3 Table 3.1 Comparison of existing frameworks for measuring energy security International Energy Security Risk Index Number of countries WEC Energy Sustainability Index WEF Energy Architecture Performance Index 75 94 Compares energy security risks across countries and country groups, including how these risks change over time. Ranks countries in terms of their likely ability to provide a stable, affordable, and environmentallysensitive energy system. Measures performance of energy systems in three areas: economic growth & development, environmental sustainability, and energy access & security. Evaluates energy supply projections Measures energy security across a range of political systems and geopolitical priorities, and across differing levels of governance and energy markets. Focus Multidimensional cross country assessment Balanced energy development Balanced energy development Supply of energy Multidimensional cross country assessment Dimensions 29 Sub-indexes 1980 - 2010 1. 2. 3. 4. 5. 6. 7. 8. Global fuel Fuel imports Energy expenditure Price & market volatility Energy use intensity Electric power sector Transportation sector Environmental 2010 - 2012 1. Energy security 2. Energy equity 3. Environmental sustainability No Yes 2012 1. Economic growth & development 2. Environmental sustainability 3. Energy security & access Yes 21 Sovacool (2013) Objective Time period 105 APERC Energy Security Indicators 2004 1. "Efficient" diversified portfolios No 18 1990 - 2010 1. Availability 2. Affordability 3. Technology development & efficiency 4. Environmental sustainability 5. Regulation & governance No Number of indicators 29 22 18 5 20 Singapore included Yes No Yes Yes Yes Singapore’s rankings: “Diversification of energy supply sources” and “Noncarbon fuel portfolio”: 20th out of 21 economies; “Net Import dependency” and “Net oil import dependency”: 20th out of 20 economies; Middle East oil import dependency: 12nd out of 16 economies. Worst performance year in energy security was 1990 and best performance year was 2005. Energy security performance has been stable since 1995. Singapore was ranked 7th out of 18 countries in energy security performance. Reported results for Singapore Worst performance year in energy security was 1995 and best performance year was 2008. Energy security deteriorated from the 1980s and reached its worst in 1995, followed by steady improvement. - Singapore's economic growth & development, environmental sustainability, energy access & security were given 0.70, 0.41 and 0.67 respectively out of a maximum of 1. Overall, it was ranked 40th among 105 countries. SESI framework design Chapter 3 3.3 SESI framework This framework is crafted mainly for industrialized countries. It adopts and energy supply chain approach for the energy system indicators. For countries such as Japan, Hong Kong, Singapore and South Korea, which are net importers of energy and have economies which depend heavily on a reliable electricity system, this framework is of high relevance. By separating the energy system into three phases, the framework highlights the importance of the continuity of the energy supply chain to the country's economy. Furthermore, this framework implicitly considers the energy trilemma which represent the three competing goals of energy security, economic competitiveness and environmental sustainability. Though this concept is captured in the Energy Sustainability Index and the Energy Architecture Performance Index, it is less evident that the three other frameworks consider the tradeoffs made between these three dimensions. Figure 3.1 shows the different dimensions in the SESI framework. Different weights are assigned to each dimension (W1-W3) and to each phase in the energy supply chain sub-index (Wa-Wc). Figure 3.1 SESI Framework 30 SESI framework design Chapter 3 The benefits of such a framework are manifold. Firstly, by separating the energy system into three phases, the weakest link within the energy system can be identified. This can lead to policies that target these specific area to strengthen the energy supply chain. This can guide policymakers provide grants to either improve the supply through increasing strategic reserves or to improve the energy delivery by improving the electricity transmission infrastructure or creating more redundancy in the system to improve service reliability. Improvements in consumption such as increasing the efficiency of machines or fuel economy can improve the performance at the consumption phase. Secondly, by considering the economics of the energy system, the economic competitiveness of the industries is considered. For industrialized countries, the cost of energy can affect the cost for the manufacturing sector reducing the price competiveness of exports. This may result in a lower level of economic growth for the country. Thirdly, most countries have either set emission reduction targets or have international obligations to reduce greenhouse gas emissions. The main source of these emissions in industrialized countries is the energy system; hence this framework takes into account the environment by including energy-related environmental indicators. This dimension allows policy makers to track the environmental performance of the energy system and formulate policies to arrest any declining trend in the environmental sustainability of the energy system. 3.4 Selection of Indicators A framework to select indicators was created with reference to other proposed criteria. Sources include the Index of U.S. Energy Security Risk (IUSESR) (Institute for 21st Century Energy, 2012a), the Energy Sustainability Index (WEC, 2012) and the Global Energy Architecture Performance Index (WEF, 2012). The framework is mainly based on the IUSESR with improvements using input from the other two sources. Furthermore, it has been adapted to fit the needs of SESI. There six criteria are: i. Relevance: The indicators had to be sensible and have high degree of relevance to Singapore’s energy security. ii. Credibility and reliability: The data sources for the indicators have to be reputable and authoritative. 31 SESI framework design iii. Chapter 3 Transparency: Manipulations to the data and indicators have to be well documented. iv. Completeness: Data should be available for 5-year intervals from 1990 to 2010 v. Reusability and updatability: Data should be collected regularly to facilitate updating of SESI in the future. vi. Quality: The best indicators available given the constraints should be selected to ensure that results from SESI are representative of Singapore’s energy security. A 3-level rating system is proposed to gauge an indicator’s ability to meet each of the six criteria. An indicator that fulfills the criteria completely will achieve a rating of 2 whereas a rating of zero means that the indicator does not fulfill the criteria. The level of ratings is shown in Table 3.2. Based on the criteria set, the indicators are given ratings for each of the criteria. The ratings are tabulated in Table 3.3. There are no indicators with level 0 for any of the criteria. Majority of the indicators are at level 2, the highest rating level. This shows that the carefully selected indicators are able to perform their function well. For certain criteria, such as credible and reliable and completeness, these ratings can be improved when additional historical data is published by the relevant government agencies. 3.5 Banding of indicators The indicators selected usually have different units and hence normalisation is needed. Many different methods of normalisation have been used in the construction of energy security indexes. Some popular methods include min-max used in Gnansounou (2008) and Gupta (2008), distance to a reference used in Institute for 21st Century Energy (2012b) and standardisation used in Martchamadol and Kumar (2012). However, we advocate another normalisation we term banding. It has been used by Augutis et al. (2012) and Jewell (2011) to help codify the level of energy security for each individual indicator. 32 SESI framework design Chapter 3 Table 3.2 Criteria ratings for indicators Criteria Relevance Level 0 Weak link to energy security. Does not address energy security directly. Level 1 Level 2 Used in other energy security indexes. Directly related to Singapore’s energy security. Credibility and Based on data from the internet or reliability estimates. Based on data from international organization and agencies. Based on published sources by Singapore’s government agencies. Transparency No notes accompany the data. Data may have undergone complex manipulations. Manipulations of the data are interpreted independently. Assumptions in the data are well documented. Any manipulations are stated explicitly. Completeness Data is available irregularly or have missing data points. Data is available historically for 5 year intervals. Data is available annually for entire study period. Reusability and No evidence of active data collection. updatability Data is collected every 5 years actively. Data continues to be collected annually. Quality Proxy is used due to lack of quality indicators or data. Most suitable indicator to measure energy security performance. 33 Addresses energy security on the global scale, not specific to Singapore’s energy security. Indicator does not directly relate to what needs to be measured. SESI framework design Chapter 3 Table 3.3 Criteria rating results for indicators No. Indicator 34 Relevance Credibility and reliability Transparency Completeness Reusability and updatability Quality 1. Energy intensity 2 2 2 1 2 2 2. Price of crude oil 2 1 1 2 2 2 3. Price of natural gas 2 1 1 2 2 2 4. Electricity prices for residential customers 2 2 2 2 2 1 5. Energy cost as a percentage of manufacturing operating cost 2 2 2 1 1 1 6. Energy import dependence (% of TPES) 2 2 2 1 2 2 7. Fuel mix of TPES 2 2 2 1 2 2 8. Ratio of domestic oil consumption to refinery throughput 2 2 2 1 1 2 9. Strategic petroleum reserve 2 1 2 1 1 1 10. Technology diversity in electricity generation 2 2 2 2 2 1 11. Electricity load factor 2 2 2 2 2 2 12. System Average Interruption Duration Index (SAIDI) 2 2 2 2 2 2 13. System Average Interruption Frequency Index (SAIFI) 2 2 2 2 2 2 2 2 1 2 2 15. Total final energy consumption (TFEC) per capita Electricity generation efficiency 2 2 2 2 1 2 2 16. TFEC/GDP ratio 2 2 2 1 2 2 17. Land transport fuel diversity 2 2 2 1 2 1 2 2 1 1 2 14. 18. Energy-related CO2 emissions per capita 1 19. Carbon intensity (Emission/GDP) 2 2 2 1 1 2 20. Carbon factor (CO2/TPES) Share of non-fossil fuel in TPES Modal share of public transport 1 2 2 1 1 2 1 2 2 1 2 2 2 2 2 2 2 1 21. 22. SESI framework design Chapter 3 An example of a banding system is the Pollutant Standards Index used by the National Environmental Agency (NEA) to “provide accurate and easily understandable information about daily levels of air quality” (NEA, 2014). Banding requires index developers to create bands for each of the selected indicators to reflect the level of security or insecurity. The number of bands used depends on the granularity desired. The argument for banding is that certain minute changes in energy indicators may not translate to significant changes in the perceived level of energy security and that only when an indicator exceeds a certain threshold value does the energy security situation alter significantly. The counter argument is that multiple small changes may contribute to a significant change in the energy situation that will not be reflected in such a discrete system. However, the system can be made more sensitive by increasing the number of bands. It should be noted that having too many bands may reduce the interpretability of the system. The advantages of using banding for normalisation are numerous. Firstly, the interpretability of the indicators is improved. Given the legend to read the indicators, policymakers can immediately identify which indicators require attention. Secondly, unlike the min-max, distances to reference and standardisation methods, the bands do not have to be re-adjusted every time a new set of data is added. Thirdly, the selection of a reference year is not required. In distance to a reference, when an inappropriate reference year is selected, the results obtained may be biased. For example, if 2008 was chosen as the reference year, the oil price may not be representative of the average oil price over time. Fourthly, banding allows for a non-linear scale, for example, the percentage of renewable energy can be classified as low security when it is below 30%, medium security when it is between 30% to 80% and high security when it is above 80%. One problem with having a linear scale is that the significance of a development may be different over different ranges. For example, when efficiency of an appliance is improved from 60% to 70%, the technological improvement and challenges will be much different from improving the efficiency of the same appliance from 80% to 90%. In addition, the impact or significance is also vastly different in the two cases. Last but not least, adopting a banding approach can simplify scenario analysis by not requiring very detailed forecasts especially for nonquantitative measures. It is much easier and reasonable to project a band or range for oil prices than to forecast specific numbers. Banding is not without its own set of disadvantages. Subjective judgement is in-built into the banding exercise, hence stakeholders and policymakers may not 35 SESI framework design Chapter 3 agree to the bands set by the creators of the index. However, this brings about another point on the banding system: the bands are flexible and can be adjusted to meet the needs of the stakeholders or policymakers. Another issue is that when the actual data fluctuates near the edges of the bands, this may result in the indicator switching from band to band without a large absolute change. This is unavoidable but may be prevented with careful calibration of the bands to increase or reduce the sensitivity of the system. 3.6 Weighting and aggregation For weighting indicators for aggregation into composite indicators, there are five major methods: equal weights, import/fuel share, principal component analysis (PCA), Analytic Hierarchy Process (AHP) and Data Envelopment Analysis (DEA). This study chooses not to use the above mentioned quantitative approaches. A subjective allocation of weightings is adopted. This is similar to how policymakers will allocate weightings to each indicator according to how important they perceive each indicator to be in terms of a nation’s energy security. It is important to note that since the weighting is arbitrarily assigned, it retains the flexibility for reallocation by stakeholders or when circumstances change such as the growing importance of a certain fuel over another. Simple additive aggregation according to the assigned weightings is proposed for combining the indicators into an index. It has been found to be the most widely used aggregation methods for energy security indexes. The energy security index (ESI) can be formulated as 𝐸𝑆𝐼 = ∑𝑛𝑖=1 𝑤𝑖 𝐼𝑖 (1) where wi is the weighting assign to indicator Ii and there are altogether n indicators. Other aggregation methods such as geometric aggregation and multi-criteria approaches were considered but were ruled out as these methods would introduce yet another layer of complexity into the energy security index and hence were not selected for the aggregation process. 3.7 Evaluation of SESI methodology The RACER is a framework to evaluate scientific tools that are used for policymaking (Lutter and Giljum, 2008). RACER stands for relevant, accepted, credible, easy and robust. It assesses tools based on how relevant they are to the 36 SESI framework design Chapter 3 objectives of the project, the level of acceptance of the tool by stakeholders, how credible the tool is to non-experts and also the level of clarity of the tool. The framework also evaluates the ease of data collection and also checks for the possibility of manipulation of the tool. It will be used to assess SESI suitability as a methodology to evaluate Singapore’s energy security and also its usability for energy policymaking in Singapore. 3.7.1 Relevant SESI possesses a high level of relevance as it was developed for the purpose of measuring energy security. The aims of the index were to identify gaps in Singapore’s energy security and also to track Singapore’s energy security performance against its published targets. Based on SESI, policies can be formulated to address the identified gaps and strengthen Singapore’s energy security. Apart from energy security, the framework was designed with consideration of the energy tri-lemma, characterized by the need to consider economic competitiveness and environmental sustainability together with energy security. Hence, SESI encourages policies which also contribute to the two other goals in the energy trilemma. In developing SESI, Singapore’s national commitments and targets were taken into account to enable the tracking of progress towards these targets. SESI has been designed also to pre-empt energy disruptions by identifying signals that show deteriorating energy security. SESI provides time-series data to track changes in Singapore’s energy security over time. This will enable policymakers to evaluate the effectiveness of energy policies that have been implemented in the past. An annual SESI calculation may facilitate tracking of short-term changes and allow for fine-tuning of policies. The time series data will also allow for tracking of trends over time and comparison of Singapore’s energy security with countries in the region and around the world. SESI allows for forecasting and modelling through scenario analysis. Given various scenarios and assumptions, developing future projections of Singapore’s energy security is possible. Some of such policies modelled may include new energy sources (i.e. nuclear energy), introduction of carbon pricing and also new 37 SESI framework design Chapter 3 environmental standards. The effects of these policies on the economy and also the environment can also be studied based on SESI’s results. The main level of application for SESI is at the national level. This caters to the main objective of the project which is to analyses Singapore’s energy security at the national level. Further refinements have to be made if analysis is needed at the sectoral level. 3.7.2 Accepted The indicators used in SESI have been largely used in other studies that measure energy security. The indicators have been clearly explained in the documentation. During the selection of the indicators, care was taken to ensure that indicators selected can be easily accepted and understood by policymakers. Furthermore, current indicators used by the Energy Market Authority (EMA) such as SAIDI and SAIFI were incorporated such that the resulting framework is useful and is likely to be accepted by the national agencies. Where new indicators are proposed, such as the ratio of domestic oil consumption to refinery throughput, the rationale for proposing such new indicators are stated in the documentation. The indicators chosen are also widely used in other energy security studies in the literature. Examples of these indexes include The US Index of Energy Security Risk (Institute for 21st Century Energy, 2012a), the Energy Security Index by ERIA (2012), and the Energy Sustainability Index (WEC, 2012). Indexes from peerreviewed journals were also consulted to ensure that indicators used in SESI were accepted in academia. 3.7.3 Credible The use of the banding system results in an unambiguous interpretation of SESI to the policymakers and for the general public. Furthermore, the simple structure of the framework allows for easy comprehension of the sub-indexes and indicators that make up SESI. The framework proposed is also transparent and SESI can be easily replicated if new data is available. Full disclosure of the underlying data, assumptions and calculation methods increase the transparency of SESI. The end product of the 38 SESI framework design Chapter 3 framework is easily interpretable and reproducible by policymakers should they want to adopt the index for their monitoring and decision making purposes. 3.7.4 Easy The data collected for SESI is mostly available in the public domain from published government reports. Hence, data inputs are not expected to be too expensive and onerous. Most of the data are also available in electronic form to facilitate collection. SESI can also be updated easily as most of the data required are already being collected by government agencies regularly. The implementation of software to facilitate data collection and index building has also been developed in a separate project. The software is developed such that users do not require a high level of expertise in the domain to operate the software. Manuals are also provided to equip policymakers with the necessary skills to utilize the software effectively and efficiently. Having considered the energy trilemma from the onset, SESI is expected to complement seamlessly with other policy decision systems and methodologies. SESI easily complements energy economics and environmental policy decisions. Further efforts can also be done to enable further integration with other policy decision support tools available. 3.7.5 Robust Having reviewed and analysed other energy security indexes before formulating the framework for SESI, it is safe to assume that SESI was designed based on sound principles for energy security. By segregating SESI into various subindexes that limits overlapping, double counting is minimized. The assumptions made for each indicator are also clearly stated in the documentation. The indicators selected are also well-defined and quantified. Although double counting is avoided, the indicators are closely related and can detect changes rapidly if an annual SESI is calculated. The indicators also have high reliability and are accurate and repeatable. The calculations and formulas used in the indicators are clearly specified in the documentation. 39 SESI framework design Chapter 3 On the whole, SESI is able to comprehensively represent the Singapore’s energy security performance. It also considers the larger problem of the energy trilemma, ensuring that economic competiveness and environmental sustainability are not compromised in optimizing Singapore’s energy security. 3.8 Conclusion In this chapter, a three dimensional energy security framework has been proposed for industrialized countries such as Singapore. Together with consideration of the unique energy profile and landscape of Singapore suitable energy indicators were selected to measure Singapore's historical energy security. A separate framework was also adapted from existing indicator selection frameworks to ensure that selected indicators are relevant, credible and reliable, transparent, complete, reusable and updatable and of good quality. Simple normalization, weighting and aggregation methods are selected for SESI to reduce complexity which may lead to unintended consequences on the interpretation of the index. The resultant framework and index has been evaluated based on the RACER framework and were found to meet its criteria (i.e. Relevant, Accepted, Credible, Easy and Robust). Hence, it can be concluded that the proposed framework is fit for its purpose of measuring Singapore's energy security. 40 Implementation of SESI Chapter 4 Chapter 4. Implementation of SESI 4.1 Introduction The framework proposed in the previous chapter is further refined and implemented in this chapter. The goal of this chapter is to examine Singapore’s historical energy security from 1990 to 2010 through the proposed framework. This includes collecting, the data, normalisation, weighting, aggregation to form the index and the interpretation of the results. 4.2 Data sources We apply the above proposed framework and index construction methods to the data of Singapore to study how Singapore’s energy security performance has changed over time. Five reference years: 1990, 1995, 2000, 2005 and 2010 are selected. The number of indicators selected for analysis are 5 (for economic), 12 (for energy system) and 5 (for environmental). The set of indicators are shown in Table 4.1. The data used was collected from multiple sources and further calculations were made to arrive at the energy security indicators proposed. The Gross Domestic Product and population figures (Singstat, 2014), energy data (EMA, 2005, 2010, 2011, 2012a, b), electricity prices (SP, 1997, 2001) and land transport data (LTA, 2013) were collected from annual reports and official reports published by the various statutory boards under the Government of Singapore. The prices of crude oil and natural gas were obtained from the BP statistical review (BP, 2013). Additional data on non-fossil fuels utilized was obtained through IEA (2012b). Table 4.1 lists the energy indicators chosen and the data from 1990 – 2010. All prices and ratios are adjusted to 2005 Singapore Dollars (SGD) prices wherever possible. 4.3 Singapore energy security indicators To analyse Singapore’s energy security, the framework presented in the Section 3.3 is utilised to structure the index and select the indicators for inclusion into the index. The Singapore Energy Security Index (SESI) is built upon the three interconnected dimensions of Economic, Energy Supply Chain and Environment as illustrated in Figure 4.2. The energy system indicators are further classified into 41 Implementation of SESI Chapter 4 Table 4.1 Indicators for Singapore Energy Security Index. Sources: Own calculations with data from Singstat, 2013; BP, 2013; SP, 1997, 2001; EDB, 1991, 1995, 2000, 2005, 2010; IEA, 2012; EMA, 2005, 2010, 2011, 2012; LTA, 2013. Indicator Unit 1990 12 1995 2000 2005 2010 Energy intensity toe/mil SGD (2005) 84.7 78.0 74.5 72.7 61.0 Price of crude oil SGD (2005)/barrel 50.66 24.44 49.98 90.75 98.28 Price of natural gas SGD (2005)/mmBtu 5.935 3.432 5.068 9.788 9.902 Electricity prices for residential customers ¢ (2005) / kWha 16.9 13.9 18.8 17.7 21.3 Energy cost as a percentage of manufacturing operating cost % 7.27 6.14 4.57 4.67 5.44 Energy import dependence (% of TPES) % 99.2 98.3 98.6 97.9 97.7 Fuel mix of TPES HHI 0.983 0.709 0.803 0.497 0.481 Ratio of domestic oil consumption to refinery throughput % 16.8 16.7 26.3 15.3 16.5 Strategic petroleum reserve days 90 90 90 90 90 Energy Technology diversity in electricity generation HHI 0.666 0.666 0.613 0.453 0.489 System Electricity load factor % 39.16 41.24 65.35 43.16 52.36 System Average Interruption Duration Index (SAIDI) min 3.40 3.40 1.73 0.45 0.76 System Average Interruption Frequency Index (SAIFI) - 2.41 2.41 1.03 0.01 0.04 Total final energy consumption (TFEC) per capita toe 1.05 1.30 1.48 1.89 1.83 Electricity generation efficiency % 38.3 38.6 40.8 42.2 41.3 TFEC/GDP ratio toe/mil SGD (2005) 38.63 36.53 36.03 38.56 32.38 Land transport fuel diversity HHI 0.971 0.977 0.973 0.974 0.884 Energy-related CO2 emissions per capita tCO2 7.03 8.02 9.05 9.47 8.56 Carbon intensity (Emission/GDP) ktCO2/mil SGD (2005) 0.258 0.226 0.220 0.193 0.152 Carbon factor (CO2/TPES) tCO2/toe 3.08 2.95 3.00 2.72 2.55 Share of non-fossil fuel in TPES % 0.83 1.73 1.37 2.08 2.31 Modal share of public transportc % 67 67 63 63 59 Dimension Economic 42 Environmental 12 Some figures were not available for the year 1990. For the numbers highlighted in bold, the figure for 1990 is assumed to be the same as in 1995. 42 Implementation of SESI Chapter 4 supply, energy delivery and consumption phases. This framework provides a comprehensive overview of the energy security situation in Singapore. 4.3.1 Economic indicators The indicators in this dimension track both the international costs of energy inputs into the Singapore energy system and also the delivered cost that consumers are paying. It is expected that with higher energy costs, both industries and personal consumption will be impacted resulting in lower economic energy security. The selected indicators are energy intensity, energy prices (crude oil and natural gas), electricity prices for residential consumers and energy cost as a percentage of operating cost for the manufacturing industry. Energy intensity is defined as TPES divided by GDP in our study. It can be considered as a measure of how efficient a country is in generating value per unit of energy consumed. Singapore’s energy intensity has been gradually decreasing from 84.7 toe/SGD mil in 1990 to 61.0 toe/SGD mil in 2010. The price of crude oil impacts the cost of gasoline and also industrial input costs. In addition, petroleum products make up 12.3% of Singapore’s fuel mix for electricity generation (EMA, 2013a). An increase in crude oil price will no doubt increase production costs and affect Singapore’s price competiveness. The price of crude oil has fluctuate greatly per barrel from SGD 50.66 in 1990 to a low of SGD 24.44 in 1995 and assumed an upward trajectory to close to SGD 100 in 2010. In the New Policies Scenario from the World Energy Outlook (WEO) (IEA, 2013b), crude oil prices is projected to increase by 20% in 2020 from 2010 levels. This will lead to significant challenges to the Singapore economy. Natural gas is the main component of Singapore’s fuel mix for electricity generation at 84.3% (EMA, 2013a). As such, increases in the natural gas will definitely have an impact on the cost of electricity generation. The price of natural gas has tracked the price of crude oil closely due to oil-indexed contracts and has risen from a low of SGD 3.432 per mmBtu in 1995 to a high of SGD 9.902 per mmBtu in 2010. The price of natural gas is projected to increase by about 40% by 2020 in the New Polices Scenario in the WEO (IEA, 2013b), hence electricity prices 43 Implementation of SESI Chapter 4 in Singapore is expected to rise in tandem with the rise in natural gas prices unless a fundamental shift from natural gas electricity generation takes place. The electricity prices for residential customers represent the social dimension of energy costs. Singapore enjoys full electrification and the policy is not to subsidize energy costs. In the latest Household Expenditure Survey, it is reported that the lowest quintile spends SGD 77.9 monthly or 3.53% of their monthly expenditure on electricity costs (DoS, 2009). Therefore, an increase in electricity tariffs would increase the financial burden of these families and result in further hardship. The electricity prices for residential customers have tracked the trends in global energy prices, rising from 13.9₵ in 1995 to 21.3₵ in 2010. For the manufacturing industry, energy is an input of production; hence if energy cost as a percentage of manufacturing cost is high, a rise in energy costs will impact the competiveness of locally produced goods. From 1990, the industry has focused on less energy intensive and higher value added products, resulting in a decline of the percentage from 7.27% in 1990 to 5.44% in 2010. This shift is in spite of rising energy prices signalling that the energy security for the manufacturing sector has improved. 4.3.2 Energy supply chain indicators (Supply) The energy system indicators are further categorized into three phases: supply phase, energy development phase and consumption phase. Each phase consist of four indicators which measure the energy security of the energy system in the corresponding phase. Together these indicators form a holistic view of the energy supply chain. Performance of the individual phases can be observed by looking at the indicators in each phase. The indicators for the supply phase are energy import dependence, the fuel mix of the TPES, ratio of oil consumption to refinery throughput and the amount of strategic petroleum reserves. Energy import dependence is measured in terms of percentage of TPES. As Singapore does not possess any fossil fuel reserves, the only indigenous contribution comes from waste to energy operations. This has contributed to less than 2.5% over the entire study period. Singapore’s energy import dependence is not expected to 44 Implementation of SESI Chapter 4 change to a large extend unless nuclear or renewable energy technologies are utilized in a substantial manner in the future. The fuel mix of TPES represents the diversity of the fuels used for energy generation. It is calculated using the Herfindahl–Hirschman Index (HHI), which is a measure of market concentration (US DoJ, 2014). The formula for the HHI is given as: 𝐻𝐻𝐼 = ∑𝑛𝑖=1 𝑆𝑖2 (2) where n is the number of fuels used and Si is the share of fuel i in the fuel mix. When the fuel mix is diverse, the value of the HHI is below 0.15, on the other hand, a value above 0.25 indicates that the fuel mix is dominated by a few fuels. For Singapore, the fuel mix was dominated by crude oil prior to 2000 with HHI above 0.8. It has improved to 0.481 in 2010 with the increase in share of natural gas in electricity generation. Although Singapore does not possess oil reserves, it is a major oil refinery hub. The refinery input in 2011 was 56.3 Mtoe (EMA, 2013a). Therefore, we propose an indicator that is specific to Singapore, which is the ratio of domestic oil consumption to refinery throughput. A smaller ratio will imply that when there is a sudden disruption in oil supplies, Singapore may be able to tap on the refined products to meet its immediate energy needs. This ratio has remained fairly constant at around 16.5%, although there was a peak of 26.3% in 2000. Although there are no figures for Singapore’s strategic petroleum reserves, it can be assumed that regulators require power generation companies to maintain 90 days’ worth of fuel reserves stockpiles (MTI, 1997) as a mitigation measure against sudden energy disruptions. This is in line with the obligation of each IEA member country to have at least 90 days net imports worth of oil stocks (IEA, 2012a). 4.3.3 Energy supply chain indicators (Delivery) The indicators selected for the delivery phase of the energy supply chain dimension are the technology diversity in electricity generation, the electricity load factor, the System Average Interruption Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI). 45 Implementation of SESI Chapter 4 The HHI is also used to measure the technology diversity in electricity generation. Increasing the technology diversity of electricity generation diversifies the types of fuel used for generation and also reduces the risk of shutdowns due to systemic risks of using the same technology. The technology diversity in electricity generation has been increasing from 0.666 in 1995 to 0.489 in 2010. The electricity load factor measures the percentage of generation capacity utilised annually. An energy system is not secure when it runs close to full capacity, as it will have a lesser margin to deal with unexpected outages or sudden load surges. Singapore’s load factor has been below 66% throughout the study period, showing that she is well equipped to deal to unforeseen circumstances. SAIDI measures the average interruption time per customer in minutes (EMA, 2013b) . A low SAIDI indicates that supply interruptions are low and that corrective actions are expeditiously carried out to recover disrupted power supply. Singapore’s electricity supply is one of the most reliable systems in the world with SAIDI of 3.40 min in 1995 and 0.76 min in 2010. SAIFI measures the average number of interruptions per customer (EMA, 2013b). Singapore has excellent performance on the indicator with a SAIFI of 2.41 in 1995 improving to a nearly non-existent 0.04 in 2010.This shows that system reliability has been extremely high for the Singapore electricity system. 4.3.4 Energy supply chain indicators (Consumption) The indicators selected for the consumption phase of the energy supply chain dimension are the total final energy consumption per capita, the electricity generation efficiency, the total final energy consumption per GDP ratio and the land transport fuel diversity. The total final energy consumption per capita has risen steadily from 1.05 toe in 1990 to a high of 1.89 toe in 2005 before retreating to 1.83 toe in 2010. This shows that as Singapore develops, the demand for energy has increased. However, with policies to drive efficiency and declining energy intensity, the TFEC has been stabilised. With government targets to further reduce energy intensity, it is expected that TFEC will decline further. 46 Implementation of SESI Chapter 4 Singapore’s electricity generation efficiency has been steadily improving from 38.3% in 1990 to 42.2% in 2005. This is correlated to the increase in the licensed capacity of combined cycle generation plants. The first plant was introduced in 1997 with a capacity of 850 MW, making up 16.5% of the licensed capacity at that time, this has increased to 62% (6.13 GW) in 2010 (EMA, 2012a). The efficiency is expected to continue increasing with plans to increase the fuel mix share of natural gas to more than 90%. The TFEC/GDP ratio measures the effect of both the efficiency of transformation and the value generated per unit of final energy consumed. This measure has fluctuated around 37 toe/mil SGD from 1990 to 2005 but has most recently declined to 32.4 toe/mil SGD in 2010. A further decline would suggest that transformation efficiency is improving and that the economy utilizes each unit of produced energy more effectively. Prior to 2010, the HHI for land transport fuel diversity has remained above 0.97, the most recent figure in 2010 show that it has declined slightly to 0.884. This shows that our land transport is still highly dependent on oil. The slight decline is attributable to an increased in the share of electricity used. This stems from the expansion of the mass rapid transport system. Natural gas still makes up less than 0.5% of fuel share for land transport in 2010. 4.3.5 Environmental indicators There are five environmental indicators that measure carbon emissions, the share of non-fossil fuels in the energy system and also the modal share of public transport. As Singapore is a small and highly urbanised country, some indicators as proposed in Sovacool (2011) are found to be unsuitable for measuring Singapore’s environmental energy security performance. Hence, the only major concern for Singapore is the carbon emissions from the energy system. This supports Singapore’s goal of reducing energy intensity by 20% from 2005 levels by 2020 and 35% by 2030 (MEWR, 2009). The indicators selected for this dimension are the energy-related CO2 emissions per capita, carbon intensity, carbon factor and share of non-fossil fuels in TPES and the modal share of public transport. 47 Implementation of SESI Chapter 4 The energy-related carbon dioxide emissions per capita have been steadily from 7.03 tCO2 in 1990 to 9.47 tCO2 in 2005. The trend has since then reversed and declined to 8.56 tCO2 in 2010. The carbon intensity is measured by the ratio of carbon emissions to GDP. It has been steadily declining from 0.258 ktCO2/SGD mil in 1990 to 0.152 ktCO2/SGD mil in 2010. This represents a more than 40% reduction in carbon intensity over 20 years. This is in line with the reduction of energy intensity as Singapore moves into using cleaner natural gas and engages in higher value added economic activities that are less energy intensive. The carbon factor is measured by the ratio of carbon emissions to the TPES. This reflects how much carbon is emitted per unit of energy utilized. The cleaner the fuel used, the lower the value of this indicator. Up to year 2000, the carbon factor has average about 3 ktCO2/ktoe. It has since declined to 2.55 ktCO2/ktoe, which represents a 15% reduction. This is expected to decline further as Singapore increases its dependency on natural gas for electricity generation. The share of non-fossil fuel in Singapore consists of the contribution from solar, wind, biofuel and waste-to-energy operations. This indicator has steadily increased from 0.83% in 1990 to 2.31% in 2010. However, the potential expansion for these technological is limited due to the constraints of land and scalability in Singapore. Land transport also contributes significantly to Singapore’s carbon emissions, hence the increasing the modal share of public transport would reduce carbon emissions arising from private transport. The modal share of public transport during peak hours has been declining from 67% (1990-1995) to 59% in 2010 (LTA, 2010). This is due to the increasing affluence of the Singapore population and the aspirations of owning private vehicles. The government has since targeted to increase this share (LTA, 2013). 4.4 Normalization Normalization is done by the process mentioned in Section 3.5. The banding scheme is given in Table 4.2. There are a total of 5 bands, with 0 being the least 48 Implementation of SESI Chapter 4 secure and 4 being the most secure. There are two types of indicator. For the first type, energy security increases with increasing indicator value. An example is electricity generation efficiency; for energy efficiency below 20%, it is assigned band zero, on the other hand when generation efficiency exceeds 50 it is assigned band four, the highest band. The second type is energy security that increases with decreasing indicators values. An example is energy intensity. It is assigned the least secure band zero when it exceeds 300 and band four when it does not exceed 150. The bases on which the bands have been set are based benchmarking with other countries, taking into consideration what is possible for Singapore. For example, the share of non-fossil fuel in TPES reaches the highest band when it exceeds 20%. This is a relatively low number compared to other countries which have substantial hydro, geothermal, wind or solar energy plants. However, 20% is an ambitious tenfold increase target for Singapore which recorded only 2.31% in 2010. The result of the banding exercise is shown in Table 4.3. A possible argument against the setting of the bands is that stakeholders may disagree with the bands that have been set by the authors. However, the main contribution of this paper is the methodology rather than to discuss the suitability of the bands. Further in-depth studies with stakeholder participation could be proposed to decide on the bands if the set currently proposed is found to be unsuitable. 4.5 Weighting and aggregation The weighting assigned to each indicator is also listed in Table 4.2. In the sub-index column, the weighting for each indicator within the sub-index is given. The individual sub-indexes are further weighted: Economic – 20%, Energy System – 60%, Environmental – 20%. The larger weighting given to the energy system is to emphasize the importance of having and uninterrupted energy supply. The final weighting in the index is given by multiplying the weighting of each indicator in the sub-index by the weighting assigned to the sub-index. Figure 4.1 shows the SESI framework together with the weights assigned to each dimension and phase in the energy supply chain sub-index. In weighting the indicators, another level of subjectivity was introduced into the system. However, it can be said that no consensus have been reached on the issue 49 Implementation of SESI Chapter 4 of weighting and weighting the indicators based on the importance of each indicators as perceived by the authors seemed most appropriate. Similar to the calibration of the bands, stakeholders can conduct discussions on the weighting issue to propose a set of weightings which are acceptable to all. Figure 4.1 SESI framework with weights In an effort to reduce the complexity of the energy security index, the simplest form of aggregation was used to aggregate the indicators. The additive aggregation method described in section 3.6 was used. The end result is the Singapore Energy Security Index (SESI). 4.6 Discussion of results A rating scheme based on the numerical results obtained by the SESI and its sub-indexes as shown in Table 4.4 was proposed. This rating seeks to qualify the numerical result obtained and thus improve the interpretability of the indexes. 50 Implementation of SESI Chapter 4 The numerical results both the sub-indexes and SESI are presented in Table 4.5 13. The graphs for the indexes are shown in Figures 4.1 and 4.2. Among the subindexes, the largest change observed was in the economic sub-index. This subindexes started from 3.00 (Excellent) in 1990 and improved to 3.4 (Excellent) in both 1995 and 2000 before declining to 2.80 (Good+) in 2005 and further to 2.20 (Good) in 2010. The difference between the highest and lowest performance is 1.2. The main reason for this decline can be attributed to the rising crude oil prices which in turn pushed up natural gas prices. 4.0 3.5 3.0 2.5 2.0 1.5 SESI 1.0 Economic Energy Supply Chain 0.5 Environmental 0.0 1990 1995 2000 2005 2010 Figure 4.2 Singapore Energy Security Index (SESI). The energy system sub-index attained a Fair+ rating of 1.63 in 1990 which improved to 2.18 (Good) in 2010. The improvement is due to a more diverse fuel-mix for TPES, better technology diversity, an improvement in SAIFI and also enhancements to the electricity generation diversity. The results for the sub-index of each phase in the energy system are shown in Table 4.6 and Figure 4.3. As Singapore, does not have fossil fuel resources and reserves, the supply sub-index is expected to have low performance and this is reflected in Figure 4.3. However, it can be observed that the government has taken 13 As there are no similar single country studies on Singapore’s energy security, the only comparison possible is with the multi-country studies listed in Table 3.1. However, as different frameworks are used the results may not be directly comparable. Furthermore, cross country studies focus on ranking countries according to their energy security performance and may not use country-specific indicators like those proposed in this thesis. 51 Implementation of SESI Chapter 4 steps to increase the diversity of fuel mix from one that is highly dependent on oil to a system where natural gas plays a larger part. 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Energy Supply Chain Supply Delivery Consumption 0.5 0.0 1990 1995 2000 2005 2010 Figure 4.3 Graph of energy supply chain sub-index results (1990 – 2010). Further diversification of the fuel mix will result in even better performance for this sub-index. Other recommendations will include increasing the refinery capacity to reduce the ratio of oil consumption to refinery throughput and also to increase Singapore's strategic petroleum reserves to reduce the impact of a short-term supply disruption. In the delivery sub-index, the performance of Singapore's energy delivery infrastructure has been steadily increasing since 1995 and has reached a Good+ rating since 2005. This can be attributed to the exceptional reliability exhibited by the electricity system with extremely low SAIDI and SAIFI values. Recommendations to improve this sub-index include increasing the technology diversity of electricity generation by introducing renewable energy in a larger scale or to increase the electricity generation capacity to reduce the electricity load factor further. However, it should be noted that increasing the generation capacity entails an economic cost which may outweigh the benefits derived given that Singapore's electricity system has been highly reliable in the past. 52 Implementation of SESI Chapter 4 Table 4.2 Banding scheme and weightings for the Singapore Energy Security Index Dimension Economic Energy Supply Chain 53 Environmental Indicator 1 2 3 4 Weighting Sub-indexa SESI Energy intensity Price of crude oil Price of natural gas Electricity prices for residential customers Energy cost as a percentage of manufacturing operating cost > 300 > 105 > 15 > 25 >8 200 - 300 85 - 105 11 - 15 22 - 25 6-8 175 - 200 75 - 85 7 – 11 20 - 22 5–6 150 -175 50 - 75 5-7 18 - 20 4-5 < 150 < 50 0.81 > 100 > 180 0.6 - 0.8 0.5 - 0.81 50 - 100 120 - 180 0.4 - 0.6 0.25 - 0.5 35 - 50 60 - 120 0.2 - 0.4 0.2 - 0.25 20 - 35 30 - 60 < 0.2 < 0.2 < 20 < 30 0.17 0.17 0.08 0.08 0.1 0.1 0.05 0.05 Technology diversity in electricity generation Electricity load factor System Average Interruption Duration Index (SAIDI) System Average Interruption Frequency Index (SAIFI) > 0.5 > 80 > 180 > 2.0 0.4 - 0.5 70 - 80 100 - 180 1.6 - 2.0 0.3 - 0.4 60 - 70 90 - 100 1.1 - 1.6 0.2 - 0.3 40 - 60 40 - 90 0.7 - 1.1 < 0.2 < 40 < 40 < 0.7 0.08 0.08 0.04 0.04 0.05 0.05 0.025 0.025 Total final energy consumption (TFEC) per capita Electricity generation efficiency TFEC/GDP ratio Land transport fuel diversity >5 < 20 > 140 > 0.81 4-5 20 - 30 100 - 140 0.5 - 0.81 3–4 30 - 40 80 - 100 0.25 - 0.5 2-3 40 -50 60 - 80 0.2 - 0.25 50 < 60 < 0.2 0.07 0.05 0.07 0.07 0.04 0.03 0.04 0.04 Energy-related CO2 emissions per capita Carbon intensity (Emission/GDP) Carbon factor (CO2/TPES) >8 > 0.56 > 4.3 5-8 0.35 - 0.56 3.4 - 4.3 3–5 0.26 - 0.35 2.7 - 3.4 1-3 0.18 - 0.26 1.6 - 2.7 70 0.2 0.04 0.2 0.04 Modal share of public transport a Banding scheme 0 Rounded to nearest 0.01 Implementation of SESI Chapter 4 Lastly, the consumption sub-index has exhibited high performance of a Good+ rating throughout the study period. This can be attributed to Singapore's low TFEC per capita and TFEC per GDP ratios. The generation efficiency of electricity has also been improved since the switch from a predominantly oil fuel mix to the highly efficient natural gas combined cycle generation technology. However, the main indicator that has been affecting the performance of this sub-index is the land transport fuel diversity, the predominant fuel in this sector has been oil since 1990 and there has not been any significant shift away from oil except for the expansion of the Mass Rapid Transit system which runs on electricity. More should be done to shift the dependence of road vehicles to other fuel sources such as natural gas, biofuels or electricity to reduce the dependence on oil. Comparing the three phases, the most pressing phase which needs the most attention is the energy supply sub-index. Focusing on this area would reap the most benefits for Singapore's energy security. Since energy import dependence cannot be improved in the short term, the government should place emphasis on further diversifying the fuel mix and also building up more reserves to buffer against short term disruptions. In the long-term, it is worthwhile to invest and research into alternative energy sources such as nuclear or other renewables to reduce our import dependence. The environmental sub-index has also improved slightly. It was at the Fair+ rating from 1990 to 2005 before improving to 2.00 (Good) in 2010. Improvements in both the carbon intensity and carbon factor led to the improved rating. It is surprising that given the changes observed in sub-indexes, SESI has been stable and improving for the entire study period as shown in Figure 4.1. The index was 1.94 (Fair+) in 1990 and improved to 2.19 (Good) in 2005 before dropping slightly to 2.15 in 2010. This showed that improvements in both the energy system and environmental sub-indexes were offset by the decline in the economic sub-index. As mentioned, the decline in energy security was due to the increase in energy prices, this factor is largely beyond Singapore’s control. On the other hand, decisions like improving the efficiency and reducing the carbon footprint of Singapore’s energy system are possible mitigation measures to combat the decline in energy security resulting from economic factors. 54 Implementation of SESI Chapter 4 Table 4.3 Banding results Indicator 1990 1995 2000 2005 2010 Energy intensity 4 4 4 4 4 Price of crude oil 3 4 4 1 1 Price of natural gas 3 4 3 2 2 Electricity prices for residential customers 4 4 3 4 2 Energy cost as a percentage of manufacturing operating cost 1 1 3 3 2 Energy import dependence (% of TPES) 0 0 0 0 0 Fuel mix of TPES 0 1 1 2 2 Ratio of domestic oil consumption to refinery throughput 4 4 4 4 4 Strategic petroleum reserve 2 2 2 2 2 Energy Technology diversity in electricity generation 0 0 0 1 1 System Electricity load factor 4 3 2 3 3 System Average Interruption Duration Index (SAIDI) 4 4 4 4 4 System Average Interruption Frequency Index (SAIFI) 0 0 3 4 4 Total final energy consumption (TFEC) per capita 4 4 4 4 4 Electricity generation efficiency 2 2 3 3 3 TFEC/GDP ratio 4 4 4 4 4 Land transport fuel diversity 0 0 0 0 0 Energy-related CO2 emissions per capita 1 0 0 0 0 Carbon intensity (Emission/GDP) 3 3 3 3 4 Carbon factor (CO2/TPES) 2 2 2 2 3 Share of non-fossil fuel in TPES 0 0 0 0 0 Modal share of public transport 3 3 3 3 3 Economic 55 Environmental Implementation of SESI Chapter 4 Table 4.4 Ratings for SESI range Rating Poor Poor + Fair Fair + Good Good + Excellent Excellent + Range 0.0 ≥ x > 0.5 0.5 ≥ x > 1.0 1.0 ≥ x > 1.5 1.5 ≥ x > 2.0 2.0 ≥ x > 2.5 2.5 ≥ x > 3.0 3.0 ≥ x > 3.5 3.5 ≥ x ≥ 4.0 Table 4.5 Numerical results for sub-indexes and SESI Index Economic Energy System Environmental SESI 1990 1995 2000 2005 2010 3.00 3.40 3.40 2.80 2.20 Excellent Excellent Excellent Good + Good 1.63 1.72 1.81 2.18 2.18 Fair+ Fair+ Fair + Fair + Fair + 1.80 1.60 1.60 1.60 2.00 Fair + Fair + Fair + Fair + Good 1.94 2.03 2.09 2.19 2.15 Fair + Good Good Good Good Table 4.6 Numerical results for energy system sub-indexes Phase Supply Delivery Consumption 1990 1.00 1995 1.33 2000 1.33 2005 1.67 2010 1.67 Poor + 2.00 Fair + 2.53 Good + Fair 1.67 Fair + 2.53 Good + Fair 1.83 Fair + 2.73 Good + Fair + 2.67 Good + 2.73 Good + Fair + 2.67 Good + 2.73 Good + 4.7 Recommendations From analysing the indicators, it is possible to identify which indicators can be influenced by government policies and which are beyond the country control and influence. For example, in the economical sub-index, energy intensity and energy cost as a percentage of manufacturing costs can be improved through various energy policies to improve energy efficiency. On the other hand, certain indicators like 56 Implementation of SESI Chapter 4 energy prices in the economical sub-index or carbon factor and share of non-fossil fuel in TPES in the environmental sub-index cannot be influenced easily in the short term. This may be due to technical constraints such as not being able to find a cleaner fossil fuel than natural gas or physical constraints such as lack of land and renewable energy potential like hydro or geothermal. Certain indicators also involve mind-set shifts which may be harder to achieve. This includes promoting the usage of public transport over private transport or the adoption of alternative fuel vehicles like hybrid or electric cars that emit less carbon dioxide and add diversity into the fuel mix for land transport. On the issue of construction of energy security indexes, the proposed Economic - Energy System - Environmental framework takes into account the three dimensions of energy security, economics and the environment. This is consistent with the concept of the energy trilemma and will aid policymakers in formulating energy policies that balance the three competing goals of the energy trilemma which are energy security, economic competiveness and environmental sustainability. Banding has also been shown to be a viable method for normalising energy security indicators. The advantages and drawbacks for utilizing such a method have been listed. Future energy security indicators may adopt and/or refine this approach to produce energy security indexes which are easily interpretable and usable. This chapter has also highlighted certain pitfalls such as stakeholder opposition. This can be managed by involving the stakeholders in the banding and weighting process or leaving the system flexible for the stakeholders to alter to their preferences. 4.8 Conclusion Many energy security indexes have been proposed but the frameworks used to structure them lack an energy system perspective. This results in indexes that may not be able to pinpoint the area of weaknesses in each country or region easily. Through the proposed framework, the dimensions and areas needing attention are highlighted and policies tailored to solve existing problems can be proposed and implemented effectively. The energy security of Singapore has been analysed using the framework and have been shown to be stable throughout the study period (1990 – 2010). However, through further analysis of the sub-indexes, it was shown that the stable performance was due to a neutralising effect of a declining economic sub-index on two improving 57 Implementation of SESI Chapter 4 sub-indexes (Economical and Environmental). Hence, this further show that a framework with appropriate sub-indexes is useful is the analysis of a country’s energy security. The other contribution of this chapter is the proposal of banding as a normalising method for energy security indicators. The benefits listed include better interpretability, easier forecasting and non-linear scaling among others. Hence, future energy security indexes may want to adopt this method to normalise their indicators instead of traditional approaches. This chapter has primarily looked at Singapore’s historical energy security performance. Future possible work areas include designing possible energy scenarios and further testing of the energy security index framework through scenario analysis. The energy security of other countries in the region (i.e. ASEAN countries) can also be explored. Some issues mentioned such as the impact of weightings on the resultant index and other sensitivity analysis can also be investigated to better understand methods to construct energy security indexes. 58 Scenario and sensitivity analysis Chapter 5 Chapter 5. Scenario and sensitivity analysis 5.1 Introduction Scenario analysis has been widely used in energy security index studies to simulate how energy security performance will change under various scenarios and assumptions. At the national level, the Institute of 21st Century Energy (2012a) projected U.S. energy security based on certain assumptions on price of fossil fuel and other factors. Augutis et al. (2012) modelled the energy security level of Lithuania after the shutdown of the Ignalina nuclear power plant. Martchamadol and Kumar (2012) and Chuang and Ma (2013) projected the energy security of Thailand and Taiwan respectively. The goal of this chapter is to project Singapore’s future energy security under various scenarios using the proposed SESI framework. Sensitivity 5.2 Scenarios and assumptions 5.2.1 IEA WEO scenarios The IEA publishes the World Energy Outlook (WEO) annually and in each issue, three projections are usually made: Current Policies Scenario (CPS), New Policies Scenario (NPS) and the 450 Scenario. The BAU projects how the energy landscape will change in the future based on policies which have already been enacted. The NPS projects how the energy landscape will react to broad policy commitments that have been implemented or announced. The 450S focuses more on climate change agreements and targets a "50% chance of meeting the goal of limiting the increase in average global temperature to 2°C compared with pre-industrial levels". The policies and results from the scenarios are provided in the annexes of each annual report. 5.2.2 Scenarios for SESI To simulate various energy pathways for Singapore's future energy security, the three IEA scenarios are adapted but modified to better reflect the energy policies that have been implemented in Singapore to tackle energy limitations and challenges. 59 Scenario and sensitivity analysis • Chapter 5 BAU represents the "Business-As-Usual" (BAU) scenario and creates the baseline for comparison with the other two scenarios. It is the equivalent of CPS in the WEO. In this scenario, most indicators will be assumed to remain stable over the projection period except for those that will be affected by economic and population growth. This scenario will not assume a carbon price. • NPS will showcase the effects of an increased emphasis on improving energy efficiency. Fuel mix will be assumed to remain largely unchanged to restrict the effects observed to those resulting from increased energy efficiency. This scenario will assume a carbon price similar to the New Policies scenario in WEO for the European Union. Generation efficiency is also assumed to increase. • 450S is the most radical scenario which aims to greatly reduce Singapore’s carbon emissions in line with the 450 scenario from the WEO. This scenario considers the adoption of nuclear energy 14, an increased emphasis and share of solar and biofuel energy. Electricity imports are also considered in this scenario. These imports are based on the ASEAN power grid arrangement. This scenario will assume a carbon price similar to the 450 scenario in WEO for the European Union. Fuel diversity is also increased with the increased adoption of electric, natural gas and hybrid vehicles to reduce the demand of petroleum. In this scenario, the increases in energy security are weighted against the increase in economic costs in considering the energy trilemma. The projection period will be from 2015 to 2035 with 5 yearly intervals. This is to factor in long term effects and to allow the new energy policies to take effect. 5.2.3 General Assumptions The general assumptions for the various scenarios are presented in Table 5.1. They include the projections used for economic growth, energy elasticity, population, and CO2 prices in the scenario analysis. 14 A factsheet was released by the Ministry of Trade and Industry on the pre-feasibility study done on nuclear energy by the government in October 2012 (MTI, 2012). While the study concluded that present technologies available are not suitable, nuclear energy has not been ruled out as an energy source in the future. 60 Scenario and sensitivity analysis Chapter 5 The BAU is the baseline with the lowest GDP growth. The NPS experiences higher growth due to reduced energy costs from higher energy efficiency. The savings can be directed to other investments that can boost the GDP growth in Singapore. For 450S, the expected growth is higher than both the BAU and NPS due to increased investments in solar and nuclear energy. Growth in these industries will also create jobs that further spur GDP growth. Table 5.1 General assumptions for scenarios Indicator Unit Scenario 2010 2015 2020 2025 2030 GDP SGD Bil BAU 357 434 516 598 677 NPS 357 445 541 643 745 450S 357 445 554 674 801 BAU 0.65 0.60 0.55 0.50 0.45 NPS 0.65 0.47 0.41 0.34 0.28 450S 0.65 0.49 0.38 0.33 0.26 Energy elasticity - Population mil BAU/NPS/450S 5.5 5.8 6.2 6.4 6.7 Crude oil prices 2005 SGD/barrel BAU 145.6 157.7 166.8 173.5 178.3 NPS 142.7 147.0 149.9 152.0 153.7 450S 141.8 139.4 134.2 128.8 123.0 0 36.90 43.05 49.20 55.35 450S 0 55.35 86.10 116.84 147.59 BAU 20.2 22.7 25.0 26.9 28.5 NPS 20.2 22.4 24.3 25.8 26.8 450S 20.2 22.5 24.5 26.1 27.4 BAU 10.7 12.1 13.3 14.3 15.1 NPS 10.7 11.9 12.9 13.7 14.2 450S 10.7 11.9 13.0 13.9 14.5 BAU 51.4 57.8 63.6 68.6 72.5 NPS 49.8 55.1 59.4 62.8 65.2 450S 44.3 51.0 56.2 59.6 53.9 CO2 prices TPES TFEC Energy related CO2 emissions 2005 SGD /tonne Mtoe Mtoe MTCO2 NPS Source: Own calculations incorporating projections from IEA World Energy Outlook 2012 In BAU, the decrease in energy elasticity is the least. For NPS, due to improvements in energy efficiency, it is expected that more value can be generated 61 Scenario and sensitivity analysis Chapter 5 per unit of energy used, hence the lower energy elasticity. For 450S, the energy elasticity is lower than BAU due to high carbon taxes levied on energy use. This incentivizes businesses to reduce energy costs, however energy efficiency is not maximized and hence the energy elasticity is slightly higher compared to NPS. Population is projected to be the same for all 3 scenarios as the energy policies adopted in NPS and 450S are not expected to impact population growth. According to the population white paper (NPTD, 2013), the population is projected to reach 5.8 to 6.0 million in 2020 and 6.5 to 6.9 million in 2030. Our projections are in line with the 2020 target and slightly conservative for the 2030 target. The CO2 prices adopted in the NPS and 450S scenarios are based on the prices used in the WEO 2012 analysis (IEA, 2012c). It assumed that no carbon tax will be applied for BAU and hence carbon emissions will grow unabated. However, in NPS a carbon tax is introduced to encourage improvements in efficiency and reduce emissions. In 450S, much higher taxes are levied to reduce the level of carbon emissions to meet the 450 ppm emissions target. This will lead to a cut in energy usage and hence carbon emissions. For BAU and NPS, the fuel mix projections for TPES are presented in Table 5.2. The crude oil and solar and others shares are projected to remain the same. For natural gas, in order to maximize diversification, the share of LNG is slowly increased to reach half of the natural gas consumed. Piped natural gas share is reduced as a result. In 450S, the share of solar energy is increased gradually to reach 5% of TPES by 2030. Apart from solar energy, nuclear energy is also developed to reduce the share of carbon emissions from power generation. According to IAEA, the average nuclear share in power generation is about 23% in 2012 (IAEA, 2013). Hong Kong’s share of nuclear power in the electricity generation fuel mix is 23% in 2009 (CLP, 2013). It is projected that nuclear can provide about 30% of electricity in 2035. This translates to about 15% of the TPES. Corresponding decreases are observed in the crude oil and natural gas shares of TPES. The fuel mix of TPES for 450S is also presented in Table 5.2. 62 Scenario and sensitivity analysis Chapter 5 Table 5.2 Fuel mix of TPES for BAU/NPS and 450S Fuel source (%) Scenario 2010 2015 2020 2025 2030 Piped natural gas BAU/NPS 39.7 34.7 22.3 22.3 22.3 450S 40.0 35.0 30.0 25.0 20.0 Liquefied Natural gas BAU/NPS 5.0 10.0 22.3 22.3 22.3 450S 5.5 10.0 15.0 25.0 20.0 Crude Oil BAU/NPS 53.0 53.0 53.0 53.0 53.0 450S 52.0 52.0 51.0 45.0 40.0 BAU/NPS 0 0 0 0 0 450S 0 0 0 0 15 BAU/NPS 2.3 2.3 2.3 2.3 2.3 450S 2.5 3.0 4.0 5.0 5.0 Nuclear Solar and others Source: Projections based on scenario assumptions For the technology assumptions, in BAU, the technology level is assumed to remain constant with no introduction of technology that greatly changes the energy system characteristics. In NPS, energy efficiency improvements are envisioned, although energy usage is not expected to be reduced, the rate of consumption is expected to be lower due to more efficient machines and energy management systems. In 450S, to reduce carbon emissions substantially, investments to improve solar energy efficiency and its percentage in the primary energy supply are considered. Apart from solar energy, nuclear energy is expected to come online in 2035 which reduces the carbon emissions from the power generation sector. 5.3 SESI indicators (2010 - 2035) The projections for the BAU, NPS and 450S are tabulated in Appendix D. These figures will be the input data for the SESI projections which are presented in this section. 5.3.1 Economic indicators Based on the GDP and TPES projections, the energy intensity projections can be obtained. The largest reduction in energy intensity is observed in 450S, with 63 Scenario and sensitivity analysis Chapter 5 approximately 44% decrease in 2035 from 2010. This is followed by NPS with a 41% decrease. The least reduction is observed in BAU with only 31% decrease. The assumptions on crude oil prices are based on the oil price projections in the IEA WEO 2012 (IEA, 2012c). Crude oil prices are expected to be the highest in BAU, due to high demand resulting in more investments needed to balance the supply of oil with demand. For NPS, it is slightly lower due to lower demand as a result of lower demand as compared to the BAU. In 450S, the demand is lowest and hence oil prices are expected to decline as oppose to the BAU and NPS cases. The assumptions on natural gas prices are based on the natural gas price projections in the IEA WEO 2012 (IEA, 2012c). The natural gas price adopted is the European imports price to be in line with the historical data used. Natural gas prices are the highest in the NPS and lowest in 450S. Estimates based on the natural gas prices are also made for electricity prices for residential customers. Since the main component in the electricity fuel mix for Singapore is natural gas, the electricity price is projected to follow the trend of natural gas prices. The costs for grid charges, market support service and market administration and power system operation fees are assumed to be constant. However, in 450S, due to the introduction of nuclear energy in 2035 in 450S, there is a divergence in trend between the natural gas prices and electricity prices in 2035. Energy as a percentage of manufacturing operating cost is expected to vary with the different policies implemented in NPS and 450S. For BAU, it is projected to remain at an average of 5% throughout the projection period. In NPS, with both carbon taxation and energy efficiency improvement policies, the percentage of energy costs is expected to be reduced as businesses focus efforts on increasing energy efficiency. Energy costs are expected to decline to 4% of operating costs in 2035. For 450S, the rate of decline is slower as the focus is not in energy efficiency, given that energy prices increase more slowly in this scenario and electricity prices are lower due to the adoption of solar and nuclear power. 5.3.2 Energy system indicators For BAU and NPS, the fuel mix is expected to remain unchanged with crude oil and natural gas being imported to fulfill energy demand. Hence throughout the 64 Scenario and sensitivity analysis Chapter 5 projection period, dependence on energy import remains at 97.5%. In 450S, the dependence on imports is slowly decreased due to the expansion of solar and other renewable sources to 5% of TPES and also the addition of nuclear power that contributes to 15% of TPES in 2035. The fuel mix projected is based on the data in Table 5.2. The HHI is calculated for each scenario. For BAU and NPS, the fuel mix is assumed to be the same. There will be further diversification between piped natural gas and liquefied natural gas, hence reducing the HHI from 0.481 in 2010 to reach 0.381 from 2025 onwards. In 450S, due to the inclusion of more renewable energy and nuclear power, the observed diversification will be larger and hence the reduction will be of a greater magnitude to 0.21 in 2035 in 2035. For BAU and NPS, since the fuel share of crude oil in TPES does not change throughout the projection period, the ratio of domestic oil consumption to refinery throughput is not expected to change substantially. However, in 450S since the crude oil share of TPES is expected to be gradually reduced, domestic oil consumption is expected to drop, hence the ratio of domestic oil consumption to refinery throughput is expected to be lower. The petroleum reserves are expected to remain at 90 days for both BAU and NPS. In 450S, the reserves are expected to increase slightly given that consumption is reduced but existing reserve capacity remains constant, hence the number of days of daily consumption in reserve is increased. The technology diversity for BAU and NPS remains the same from 2010, as no major technology switch is anticipated for the power generation sector. However, in the 450S, when more renewables like solar and ultimately nuclear is broad on board, the technology diversity improves steadily from 2025 onwards to 0.344 in 2035. The load factor is not expected to change from 2010 levels in BAU and NPS. On the other hand, the load factor is expected to be reduced from 52.4% to 40.0% in 2035 in 450S due to new capacity from renewables and nuclear power. 65 Scenario and sensitivity analysis Chapter 5 These two indicators are tied to policies which improve the reliability of the electricity system. Since the performances of these two indicators are already exemplary, it is projected in all three scenarios to remain the same barring any undesirable developments. The TFEC figures are divided by the population figures to obtain the TFEC per capita for the corresponding year. In BAU, it is observed that TFEC per capita gradually rises from 1.83 toe in 2010 to reach 2.27 in 2035. The growth rate is lower in NPS, with TFEC hitting 2.14 toe in 2035. This is comparable to the increase observed in 450S. For generation efficiency, it is not expected to change in BAU and 450S, but in NPS, it is expected to increase by 2.5% in NPS through the introduction of better and more advanced technology to raise efficiency. The TFEC figures are divided by the GDP figures to obtain the TFEC to GDP ratio for the corresponding year. In BAU, this figure improves from 32.4 toe/mil SGD in 2010 to reach 22.3 toe/mil SGD in 2035. In comparison, NPS achieves a lower and better TFEC to GDP ratio of 19.1 toe/mil SGD in 2035. However, the best performance is observed in 450S, aided by the boost to GDP from increasing investments in new energy technology. The TFEC to GDP ratio registers 18.1 toe/mil SGD in 2035 in 450S. In BAU and NPS, it is assumed that the fuel diversity of land transport does not change significantly in the future. However, the usage of electric cars is encouraged in 450S, bringing down the HHI measurement from 0.884 to 0.735 in 2035, signalling a much higher fuel diversity owing to the increase in the share of electricity used. 6.3.3 Environmental indicators The CO2 emissions per capita is calculated by dividing the energy related CO2 emissions projections are divided by the population figures for the corresponding year. In BAU, this number increases from 8.56 tCO2 to 10.86 tCO2 in 2035, due to an increase in energy consumption. This indicator also increases in NPS; however, the pace is slower, reaching only 9.77 tCO2 in 2035. The slowest rate of increase is 66 Scenario and sensitivity analysis Chapter 5 observed in 450S reaching only 9.25 tCO2 in 2030, due to the increase in share of noncarbon renewables. In fact, this indicator experiences a dip to 8.08 tCO2 in 2035 when nuclear power comes online. The carbon intensity is expected to improve from 0.152 ktCO2/mil SGD in 2010. In the baseline BAU, it is projected that carbon intensity improves by approximately 30% to 0.107 ktCO2/mil SGD in 2035. In NPS, due to the improvements in energy efficiency, carbon intensity improves further to 0.088 ktCO2/mil SGD. The best improvement is seen in 450S with carbon intensity improving by almost 56% by 2035 when part of the electricity is produced from carbon free nuclear sources. For carbon factor, no changes are projected for BAU since the fuel mix and technology are assumed to be unchanged from the 2010 levels. For NPS, slight improvements are expected each period due to improvements in energy efficiencies of the generation technology. In 450S, small declines are expected in the earlier years due to a shift towards carbon free solar energy and a substantial drop is observed in 2035 when nuclear power is introduced into the energy mix. The share of non-fossil fuel in TPES follows closely to the energy import dependence as the non-fossil fuel sources are mainly the indigenous produced solar and nuclear energy. In BAU and NPS, the share remains at the current level of 2.3%, mainly from the incineration of waste and a small percentage of solar power. In 450S, the solar energy and other renewables share is increased gradually to 5% in 2030 and this is supplemented by 15% of nuclear energy in 2035. The modal share of public transport projections are based on the Land Transport Masterplan 2013 published by the Land Transport Authority (LTA, 2013) which targets that "75 percent of the trips during the morning and evening peak hours will be made by public transport by 2030". This is reflected in BAU and NPS. However, in 450S, we assume that this goal has been reached by 2025 and continues to improve to hit 80% in 2035. 67 Scenario and sensitivity analysis Chapter 5 5.4 Results The results for the BAU, NPS and 450S scenarios are presented in Appendix E. These indicators are further aggregated into sub-indexes and main SESI index in Table 5.3. For the Economic sub-index which registered a Good rating of 2.20 in 2010, it is observed that this sub-index deteriorates in all three scenarios. However, the worst performing case is BAU, where the drop is the fastest and of the greatest magnitude. It drops to the Fair rating in 2010 and remains at this level till 2035. The NPS case is more positive and still manages to improve to the Fair+ rating in 2020 and 2025, before receding back to the Fair rating. This is due to the slower rise of natural gas prices and also an increase in energy efficiency in the manufacturing sector. The 450S was the most optimistic scenario with the economic sub-index recovering from the dip to Fair rating in 2015 to the Fair+ rating in 2020 which it maintains to 2035. This is attributed to both slower rise of natural gas prices and also the resultant lower cost of energy to the manufacturing sector. The results of economic sub-index for the various scenarios are plotted in Figure 5.1. 4.0 3.5 Economic BAU NPS 450S 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Figure 5.1 Economic sub-index projections In the Energy system sub-index, BAU remains in at a Fair+ rating throughout the projection period. However, numerically there is a slight decline due to an increase in the TFEC energy consumption per capita. On the other hand, both NPS and 450S registered improvement in this sub-index with both scenarios retaining the Good rating throughout the projection period. Significant improvement is observed in 68 Scenario and sensitivity analysis Chapter 5 450S due to improvements in fuel and technology diversity for electricity generation and also the increase in the fuel diversity for land transport. The results of energy system sub-index for the various scenarios are plotted in Figure 5.2. 4.0 Energy Supply Chain BAU NPS 450S 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Figure 5.2 Energy system sub-index projections The Environmental sub-index sees improvement across the board for all scenarios. However, its performance in the 450S scenario is the most outstanding, moving up to the Excellent rating in 2035 with the introduction of nuclear energy, increasing the share of non-fossil fuel in the fuel mix. This combined with a higher modal share of public transport, improves the environmental sustainability of the energy system to a large extent. The environmental sub-indexes performances for BAU and NPS are identical, suggesting that the new policies introduce may not have a large and significant impact on the emissions of the energy system. The results of environmental sub-index for the various scenarios are plotted in Figure 5.3. Overall, the BAU shows that if no new policies are introduced, the energy security performance of Singapore is expected to decline and stabilize at a Fair+ rating due to economic impacts on the energy system. If some new policies such as encouraging and increasing energy efficiency are implemented, a decline in energy security performance is still expected, however the pace and magnitude of this decline would be slower and smaller. 69 Scenario and sensitivity analysis 4.0 3.5 Chapter 5 Environmental BAU NPS 450S 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Figure 5.3 Environmental sub-index projections Only in the extreme case of introducing nuclear energy and championing renewables to become a substantial part of Singapore's energy mix can the trend be reversed. In this case, the initial dip to the Fair+ rating in 2015 will be reversed and steady improvements will be observed till 2035 when nuclear energy is introduced into Singapore's energy mix. 5.5 Sensitivity analysis As subjective judgement has been used in assigning the weights in the index, it is instructive to analyse how the results would differ if another different set of weights are used. One possible method is to assign weights equally among each subindex and also equally among each indicator within each sub-index. The weights assigned under this method are shown in Table 5.4 under the Equal weights columns. The results are shown in Figure 5.5. The results of the economic and environmental sub-indexes are not shown as the weights remain the same under both the proposed and equal weights models. Firstly, it is observed that the adoption of equal weights raises Singapore's energy security performance in all the years studied. This can be attributed to the reduction of the weighting of the energy system from 0.6 to 0.33. Hence, the weakness in the energy system performance does not affect the overall index significantly. However, it can be observed that the difference narrows towards the end due to the decline in the economic sub-index. 70 Scenario and sensitivity analysis Chapter 5 Secondly, the energy system sub-index also experiences a boost when equal weights are adopted. This is due to the high weight (0.6) assigned to the supply phase in the proposed scheme. The equal weights model reduces this and raises the weights of the delivery and consumption sub-indexes which have much better performances. The modifications in the weights have not altered the conclusions of SESI in a significant manner. This is due to the fact that the performance of individual subindexes did not differ to a large extent. The results may be more sensitive to the weighting if the sub-indexes have very extreme differences such as very high performance in one sub-index and very low performance in another sub-index. 5.6 Conclusions Based on the historical energy security performance, Singapore's energy security has been stable in the past 20 years and the projections made under the three scenarios shows that this will continue to be the case. However, in order for Singapore's energy security to be improved in a significant manner, breakthroughs such as constructing nuclear power plants have to be achieved. The other alternative is to deploy renewable energy technologies such as solar or biofuels in a scalable and sustainable manners. Without this, Singapore's energy security will continue to be constrained by its physical limitations and lack of indigenous energy resources. 71 Sensitivity and scenario analysis Chapter 5 Table 5.3 Numerical results for various scenarios (sub-indexes and SESI) Index 2010 BAU Economic NPS 2.20 Good 450S BAU Energy System NPS 2.18 Good 450S BAU Environmental NPS 2.00 Good 450S BAU NPS SESI 450S 2.15 Good 2015 2020 2025 2030 2035 1.40 1.40 1.20 1.20 1.20 Fair Fair Fair Fair Fair 1.40 1.60 1.60 1.40 1.40 Fair Fair + Fair + Fair Fair 1.40 1.60 1.60 1.60 1.60 Fair + Fair Fair + Fair + Fair + 1.98 1.93 1.93 1.93 1.93 Fair + Fair + Fair + Fair + Fair + 2.18 2.12 2.12 2.12 2.12 Good Good Good Good Good 2.18 2.18 2.18 2.18 2.43 Good Good Good Good Good 2.00 2.00 2.20 2.20 2.20 Good Good Good Good Good 2.00 2.00 2.20 2.20 2.20 Good Good Good Good Good 2.00 2.20 2.20 2.40 3.00 Good Good Good Good Excellent 1.99 1.95 1.95 1.95 1.95 Fair + Fair + Fair + Fair + Fair + 1.99 1.99 2.03 1.99 1.99 Fair + Fair + Good Fair + Fair + 1.99 2.07 2.07 2.11 2.38 Fair + Good Good Good Good 4.0 3.5 3.0 SESI BAU NPS 450S 2.5 2.0 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Figure 5.4 SESI projections 72 Sensitivity and scenario analysis Chapter 5 Table 5.4 SESI sensitivity analysis 15 Dimension Indicator Proposed Weights Equal weights Sub-index SESI Sub-index SESI Energy intensity 0.2 0.04 0.2 0.067 Price of crude oil 0.2 0.04 0.2 0.067 Price of natural gas 0.2 0.04 0.2 0.067 Electricity prices for residential customers 0.2 0.04 0.2 0.067 Energy cost as a percentage of manufacturing operating cost 0.2 0.04 0.2 0.067 Energy import dependence (% of TPES) 0.17 0.1 0.08 0.028 Fuel mix of TPES 0.17 0.1 0.08 0.028 Ratio of domestic oil consumption to refinery throughput 0.08 0.05 0.08 0.028 Strategic petroleum reserve 0.08 0.05 0.08 0.028 Energy Technology diversity in electricity generation 0.08 0.05 0.08 0.028 System Electricity load factor 0.08 0.05 0.08 0.028 System Average Interruption Duration Index (SAIDI) 0.04 0.025 0.08 0.028 System Average Interruption Frequency Index (SAIFI) 0.04 0.025 0.08 0.028 Total final energy consumption (TFEC) per capita 0.07 0.04 0.08 0.028 Electricity generation efficiency 0.05 0.03 0.08 0.028 TFEC/GDP ratio 0.07 0.04 0.08 0.028 Land transport fuel diversity 0.07 0.04 0.08 0.028 Energy-related CO2 emissions per capita 0.2 0.04 0.2 0.067 Carbon intensity (Emission/GDP) 0.2 0.04 0.2 0.067 Carbon factor (CO2/TPES) 0.2 0.04 0.2 0.067 Share of non-fossil fuel in TPES 0.2 0.04 0.2 0.067 Modal share of public transport 0.2 0.04 0.2 0.067 Economic 73 Environmental 15 Sub-index weights rounded to 0.01 and main index weights rounded to 0.001 Sensitivity and scenario analysis 4.0 Chapter 5 SESI (Reference) SESI (Equal Weight) 3.5 Energy Supply Chain (Reference) 3.0 Energy Supply Chain (Equal Weight) 2.5 2.0 1.5 1.0 0.5 0.0 1990 1995 2000 2005 2010 Figure 5.5 SESI and Energy Supply Chain Sub-index: Equal weight case versus the reference case. 74 Conclusions Chapter 6 Chapter 6. Conclusions 6.1 Concluding remarks The definitions of energy security and indexes used to measure it have been comprehensively reviewed in Chapter 2. It is found that energy security is a context dependent concept and hence a deeper understanding of a country’s energy profile (i.e. resource endowment and level of development) needs to be considered before designing a national energy security index. The review on existing measures on energy security also highlighted that there is no agreement on how energy security should be measured given that the measurement is based on how a country defines its own energy security. In addition, the methods used also vary greatly from study to study making comparison of results among studies tricky. Despite the difficulties identified in Chapter 2, it is not possible to track and improve Singapore’s energy security without a suitable measurement tool, hence a framework for analyzing Singapore's energy security was proposed in Chapter 3 and implemented in Chapter 4. The proposed framework is novel in that it focuses on the energy supply chain due to Singapore’s high degree of industrialization. The results show that Singapore's energy security has largely been stable for the study period (1990-2010). However, upon further analysis, it is shown that although the energy supply chain and environmental dimensions have improved, the rising energy costs have resulted in a decline in the economic dimension. As for the future, based on the projections in Chapter 5, barring any major disruptions in energy trade, Singapore's energy security is projected to remain stable in the next 20 years. However, this can be further improved with more initiatives to improve energy efficiency and further research and deployment of renewables. If nuclear energy can be made safe enough for deployment, it can increase Singapore's energy security by a significant extent. The framework proposed in this thesis mainly focuses on quantitative indicators of energy security. It is acknowledged that there is a multitude of other factors which are qualitative but just as important. An example is the relationships between Singapore and its neighbouring countries, considering that it currently imports most of its natural gas from them. Some studies have tried to use proxies such as governance indexes to overcome this. Although these issues are not present in 75 Conclusions Chapter 6 the framework, they need to be evaluated together nonetheless to produce a more comprehensive picture of Singapore’s energy security. The contribution of this work is to quantify Singapore's energy security in a systematic manner and produce an analytical tool that can facilitate tracking of energy trends in Singapore and aid in policy making. The existing literature has been researched and reviewed to produce the most suitable system that is customized to Singapore's needs based on its unique circumstances. It is hoped that the system can be reviewed and updated periodically to continue to track Singapore's energy security trends in the future. 6.2 Limitations of proposed framework and index The proposed framework is not without limitations. It is acknowledged that the results obtained may be considered arbitrary due to the nature of the methods used to normalize and weigh the indicators in the index. The results obtained may vary when the bands or the weights which are exogenously determined are changed. On the other hand, using objective methods to normalize and weigh the indicators may result in another set of problems. These problems may include handling of outliers or the need to recalibrate data frequently when new data points are added. Some objective weighting methods may also give greater weights to indicators which fluctuate greatly, but this does not necessarily mean that these indicators are more important than those which remain stable over long periods. Therefore, it is recommended that users of the index understand the implications of using the normalization and weighting methods suggested and that flexibility has been retained for stakeholders and policymakers to alter the bands and weights assigned, either through further perception studies or other means. This is to ensure that ultimately they find the results obtained reasonable and useful for they own analysis. The analysis of the SESI methodology based on the RACER framework has been conducted based on the criteria stated. Third party input on this was not available but would be welcome to validate the results obtained. Feedback on other areas such as the suitability of the dimensions, indicators, weights and methods used would also be helpful to improve this piece of work. 76 Conclusions Chapter 6 6.3 Future research topics As energy security is a subjective and dynamic concept, the definition of energy security should be reviewed periodically. Furthermore, the context in which it is defined is also important. The issues that are most crucial will depend on whether the country is a net importer or exporter of fossil fuels, the level of economic dependence and even the degree of electrification of the country. Therefore, there is much left to be done in examining the tendency for different actors to define energy security differently to achieve their desired goals. Similar to how the definition of energy security has expanded over time to include energy related environmental issues, it is not surprising that more dimensions need to be considered in measuring energy security. Thus, it would be necessary to revisit the proposed framework to evaluate if changes and modifications are needed. For SESI, this framework can be refined and expanded to have sectoral-wise measurements of energy security to devise lower level policies to improve energy security at the industry and sectoral levels. This may result in actionable plans to improve the robustness and resilience of Singapore's economy as whole against energy disruptions. Such an exercise may also expose undiscovered vulnerabilities that are present currently and improve the robustness and resilience of each sector and industry. The scenario analysis provided in this thesis serves only as a starting point for modelling scenarios with different energy policies. Much more work can be done in designing possible energy pathways for Singapore through energy models. The output of these models can be translated into the appropriate indicators for the calculation of Singapore’s energy security. As the circumstances change, it is also possible that new developments such as the emergence of renewable energy solutions for land scarce countries can alter Singapore’s energy landscape beyond recognition, which would also lead to new possibilities and scenarios. It would be interesting to observe the signals that SESI would send out under these scenarios. Future areas of research include expanding the scope of the study to cover ASEAN as a region instead of just studying energy security at the national level. This would allow policymakers to compare energy security performance across countries in the region and rank the countries according to their performances. 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An Evaluation Framework for Oil Import Security Based on the Supply Chain with a Case Study Focused on China. Energy Economics 38, 87-95. Zhao, X., Liu, P., 2014. Focus on bioenergy industry development and energy security in China. Renewable and Sustainable Energy Reviews 32, 302-312. 85 Appendix A. Energy security studies reviewed Table A.1 List of energy security studies. The themes in energy security definition are energy availability (A), infrastructure (B), energy prices (C), societal effects (D), environment (E), governance (F) and efficiency (G). Publication type Source Year Country/region Energy security Journal Official paper report Others × definition Energy Themes in energy security security definition indicators or index 86 A B × × × × × × × × × × × × × × × × × × × × × × × × × × given C D E × × EC (2001) 2001 Europe Bielecki (2002) 2002 N/A DTI (2002) 2002 Britain Stern (2002) 2002 Europe Lieb-Dóczy et al. (2003) 2003 Europe Blyth and Lefevre (2004) 2004 Australia, Italy, UK and US de Joode et al. (2004) 2004 Netherlands Lesbirel (2004) 2004 Japan × × × × × Andrews (2005) 2005 US × × × × × Onamics (2005) 2005 Central/Eastern Europe × × Wright (2005) 2005 UK Department of Energy and Climate Change (2006) 2006 UK Doorman et al. (2006) 2006 Nordic countries × × × × Grubb et al. (2006) 2006 UK × × × × × Turton and Barreto (2006) 2006 Europe × × × Yergin (2006) 2006 US × × × × × Sovacool and Brown (2007) 2007 US × × Costantini et al. (2007) 2007 EU × × × × × × × × × × × × × × × × × × F provided × × × × × × × × × × × × × × × × × × G × × Hoogeveen and Perlot (2007) 2007 EU IAEA (2007) 2007 7 countries × × IEA (2007) 2007 OECD countries × × Intharak et al. (2007) 2007 Asia-Pacific countries × Wu and Morisson (2007) 2007 Kemmler and Spreng (2007) 2007 Developing countries Keppler (2007) 2007 Europe Ölz et al. (2007) 2007 O’Leary et al. (2007) Selected Asia-Pacific × × economies and EU × × × × × 87 × × × × × × IEA countries × × × × × 2007 Ireland × × × × × Rutherford et al. (2007) 2007 New Zealand × × × × Scheepers et al. (2007) 2007 EU-27 × × Spanjer (2007) 2007 Europe × Streimikiene et al. (2007) 2007 Lithuania, Latvia, Estonia × Center for Energy Economics (2008) 2008 South Asia × ESCAP (2008) 2008 Asia-Pacific countries × Frondel and Schmidt (2008) 2008 Germany and US × Gnansounou (2008) 2008 37 industrialised countries Gupta (2008) 2008 Jamasb and Pollitt (2008) 2008 UK and Europe Kessels et al. (2008) 2008 N/A Mabro (2008) 2008 N/A Nuttall and Manz (2008) 2008 N/A Patlitzianas et al. (2008) 2008 N/A Patterson (2008) 2008 N/A Augutis et al. (2009) 2009 Lithuania countries × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × 26 net oil-importing × × × × × × × 88 CNA (2009) 2009 US × × Greenleaf et al. (2009) 2009 EU × × Hughes (2009) 2009 N/A Jansen (2009) 2009 N/A Jun et al. (2009) 2009 South Korea × × × × × Kruyt et al. (2009) 2009 Western (OECD) Europe × × × × × Le Coq and Paltseva (2009) 2009 EU × × × × × Balat (2010) 2010 Turkey × × × × × Cabalu (2010) 2010 7 countries × × × × × Jansen and Seebregts (2010) 2010 N.A. × × × × × Lefèvre (2010) 2010 France , UK, × × × Löschel et al. (2010) 2010 × × × Findlater and Noël (2010) 2010 × × Sovacool and Brown (2010) 2010 × × × × Vivoda (2010) 2010 Asia-Pacific countries × × × × × × Augutis et al. (2011) 2011 Lithuania × × × × × × Bazilian et al. (2011) 2011 South Africa × × × × × × Cohen et al. (2011) 2011 Ediger and Berk (2011) 2011 Turkey Jewell (2011) 2011 IEA countries Leung (2011) 2011 China × × × × × × Sovacool (2011) 2011 Asia-Pacific countries × × × × × Sovacool and Mukherjee (2011) 2011 N/A × × × × × × Sovacool et al. (2011) 2011 ASEAN, EU and 7 other × × × × Germany, Netherlands, Spain and US Baltic states OECD and US (22 Countries) OECD (26 for oil, 20 for gas) × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × countries Angelis-Dimakis et al. (2012) 2012 Greece × × Augutis et al. (2012) 2012 Lithuania × × Dunn and Dunn (2012) 2012 US ERIA (2012) 2012 East Asian countries Goldthau and Sovacool (2012) 2012 N/A Hughes (2012) 2012 Institute for 21st Century Energy (2012a) 2012 Province of Prince Edward, Canada × × × × × × OECD and large energy × × × × 89 2012 Martchamadol and Kumar (2012) 2012 Thailand × × Pasqualetti and Sovacool (2012) 2012 N/A × × Sheinbaum-Pardo et al. (2012) 2012 Mexico × Vivoda (2012) 2012 Japan × × × × Austria, Italy and Great × × Institute for 21st Century Energy (2012b) users × × × × × US × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × Winzer (2012) 2012 WEF (2012) 2012 105 countries × × × × × WEC (2012) 2012 WEC countries × × × × × Wu et al. (2012) 2012 China × × × × × Below (2013) 2013 US × × × × × Chuang and Ma (2013) 2013 Taiwan × Escribano Francés et al. (2013) 2013 EU × × × × × Ge and Fan (2013) 2013 China × × × × × Gunningham (2013) 2013 Indonesia × × × × × Knox-Hayes et al. (2013) 2013 10 Countries × × × × × Selvakkumaran and Limmeechokchai (2013) 2013 Sri Lanka, Thailand and × Britain × × × × × × × × × × × × × × Vietnam 90 Sovacool (2013b) 2013 18 countries × × × × × × Sovacool (2013a) 2013 Asia-Pacific countries × × × × Zhang et al. (2013) 2013 China × Demski et al. (2014) 2014 United Kingdom × × Jewell et al. (2014) 2014 Global/regional × × Kamsamrong and Sorapipatana (2014) 2014 Thailand × Wu (2014) 2014 China × × × Odgaard and Delman (2014) 2014 China × × × × × Portugal-Pereira and Esteban (2014) 2014 Japan × × × × × Ranjan and Hughes (2014) 2014 Multiple × × Sharifuddin (2014) 2014 Malaysia × Sun et al. (2014) 2014 China × × Yao and Chang (2014) 2014 China × × Zhao and Liu (2014) 2014 China × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × × Appendix B. Energy security studies with indicators or indexes Table B.1 Studies incorporating specific energy security indicators and indexes. The following notations are used: Temporal (T), Spatial (S), Projection (P), 4As (I), Specific energy supply (II), Economic (III), Environmental (VI), Social (V), Others (VI), Normalization (N), Weighting (W), and Aggregation (A); under SFA, Primary area (p), Secondary area (s); under Normalisation (N), Min-max (m), Distance to a reference (r), Standardization (z), Others (o); under Weighting (W), Equal weights (1), Import/Fuel share (2), PCA (3), AHP (4), DEA (5), Others (6), under Aggregation (A), Additive (+), Others (o). Source DTI (2002) Name of indicator/ index Security of supply indicators Energy security dimensions/issues considered Supply and demand forecasts; Market signals; Market response No. of indicators Type of study T S 11 P Specific focused area (SFA) I II × III IV × V Index construction VI N W A 2 + 1 + 6 + × Geopolitical Energy Security Blyth and Lefevre (2004) Proxy Measure; Power System 2 × 12 × × Reliability Proxy Measure 91 Onamics (2005) Sovacool and Brown (2007) Aggregate Country Index Energy Sustainability Index Energy supply diversity; Internal political and economic stability; Domestic energy efficiency Oil security; Electricity reliability; Energy efficiency; Environmental quality Energy Indicators for Equity; Health; Energy use and production patterns; Sustainable Development Security IEA (2007) Energy Security Index Energy price; Physical availability Intharak et al. (2007) Energy security indicators Wu and Morisson (2007) Energy Insecurity Index IAEA (2007) Scheepers et al. (2007) Streimikiene et al. (2007) Crisis Capability Index; Supply/Demand Index Energy Indicators for Availability; Accessibility; Acceptability; Affordability 10 × 31 × × × × × × s p 16 × × p s × × × × Crisis capability; Demand/supply 63 Economic; Environmental 12 × × × × 2 3 × × × × × × Sustainable Development (EISD) Frondel and Schmidt (2008) Gnansounou (2008) Gupta (2008) Patlitzianas et al. (2008) Augutis et al. (2009) Energy Supply Risk Indicator Crude oil; Natural gas Composite Index of Vulnerability Oil Vulnerability Index Sustainable energy policy Security of energy supply; Competitive energy indicators market; Environmental protection Lithuanian Power Energy Supply Security Technical, Economic; Socio-political; Environmental 1 × × 5 × 7 × × × × 36 22 × × × × × × × × o 2 + m 3 o m 3 + o 6 + o 2 + m 6 o m 6 + 1 + Based on root causes such as extreme events, Greenleaf et al. (2009) Energy security indicators insufficient investments in new capacity, load 11 × × × balancing failure, supply shortfall, etc. 92 Jansen (2009) Le Coq and Paltseva (2009) Cabalu (2010) Energy services security Reliability; Energy costs; Policy framework; Public indicators acceptance p 38 s × Risky External Energy Supply (REES); Contribution to EU Oil; Gas; Coal 2 × × Risk Exposure (CERE) Composite Gas Supply 4 × × Price; Physical availability 2 × × Security Index (GSSI) Energy Security Price Index Lefèvre (2010) (ESPI); Energy Security Physical Availability index × s p (ESPAI) Löschel et al. (2010) Ex-post and ex-ante indicators Ex-ante; Ex-post 2 × × Sovacool and Brown Energy Security Index Availability; Affordability; Energy and economic 10 × × p s s × o s z (2010) efficiency; Environmental stewardship Energy supply; Demand management; efficiency; Vivoda (2010) Energy security assessment economic, environmental; Human security; Military instrument security; Domestic socio-cultural-political; × 44 × × × s p Technological; International; Policy Augutis et al. (2011) Energy security level Technical; Economic; Socio-political; Energy sources 61 × Crude oil; Natural gas 2 × 4 × s × p o 1 + 2 + m 3 + m 1 + Diversification of oil and Cohen et al. (2011) natural gas supplies; Global and country-specific × × diversification indices Ediger and Berk (2011) Jewell (2011) Oil Import Vulnerability Index IEA Model of Short-term Crude oil, Oil products, Natural gas, Coal, Biomass Energy Security (MOSES) and waste, Biofuels, Hydropower, Nuclear power 35 × × 93 Availability; Dependency; Diversification; Decentralization; Innovation;, Investment; Trade; Sovacool (2011) Metrics and indicators for Production, Price stability; Affordability; Asian energy security Governance; Access; Reliability; Literacy; 200 p s p p s p × × × m 1 + × × × o 1 + × Resilience; Land Use; Water; Pollution; Efficiency; Greenhouse gas emissions Availability; Affordability; Technology development Sovacool et al. (2011) Energy Security Performance and efficiency; Environmental sustainability; 20 × × Regulation and Governance Angelis-Dimakis et al. Overall Sustainability Index Social; Economic; Environmental 9 × Augutis et al. (2012) Energy Security Level Technical; Economic; Socio-political 68 × ERIA (2012) Energy Security Index 16 × (2012) × Development of domestic resources; Acquisition of overseas resources; Transportation risk management; Securing a reliable domestic supply chain; × × Management of demand; Preparedness for supply disruptions; Environmental sustainability 1 Dunn and Dunn (2012) W&J Energy Index Hughes (2012) Energy security indicators Institute for 21st Century Index of U.S. Energy Security Energy (2012a) Risk Institute for 21st Century International Energy Security Price and market volatility; Energy use intensity; Energy (2012b) Risk Index Electric power sector; Transportation sector; × Availability; Affordability; Acceptability 3 p Geopolitical; Economic; Reliability; Environmental 37 × 28 × 19 × 8 × 8 × × 16 × × 21 × × 14 × s × o 2 + s × × × r 6 + × × × r 6 + p p × z 3 + × × o 1 + o 1 + × o 2 + × m 4 + Global fuels; Fuel imports; Energy expenditures; × × Environmental Martchamadol and Kumar (2012) Energy demand; Availability of energy supply Energy security indicators × s Energy price/cost/expenditures 94 Sheinbaum-Pardo et al. Mexican Sustainability (2012) Indicators Winzer (2012) Energy security levels WEF (2012) resources; Environmental concerns; Energy market; Social; Environmental; Economic Sources of risk; Scope of the impact measure; Severity filter Energy Architecture Economic growth and development; Environmental Performance Index (EAPI) sustainability; Access and security of supply × × s p p × × o Energy security; Social equity; Environment impact WEC (2012) Energy Sustainability Index mitigation; Political strength; Societal strength; × Economic strength Wu et al. (2012) Chuang and Ma (2013) Selvakkumaran and Composite Index of China's Energy Security Energy supply security; Energy using security Multi-dimensional energy Dependence; Vulnerability; Affordability; security indicators Acceptability Energy security indicators Oil Security; Gas Security; Sustainability 7 15 × × × p s × × × Limmeechokchai (2013) Sovacool (2013b) Energy Security Index Availability; Affordability; Efficiency; Sustainability and governance 20 × × p s s × 1 + 20 × × p s p × 1 + 8 × 5 + Availability; Affordability; Technology development Sovacool (2013a) Energy Security Index and efficiency; Environmental sustainability; Regulation and governance External dependence; Supply stability; Trade Zhang et al. (2013) Oil Import Risk Index Jewell et al. (2014) Indicators of energy security Sovereignty; Resilience 19 Kamsamrong and Energy supply security index Physical energy security; Economic energy security; 5 Sorapipatana (2014) Portugal-Pereira and economy; Transportation safety × Availability and reliability of the electricity indicator generation and supply systems; Technological Esteban (2014) m × × Environmental sustainability Electricity security of supply × × s × p p p m o 9 development; Global environmental sustainability; P × 95 Local environmental protection Ranjan and Hughes Energy Security Index Diversity; Availability; Affordability; Acceptability 4 Core aspects of energy security Availability; Stability; Affordability; Efficiency; 35 for Malaysia Environmental Impact Energy security status Availability of energy resources; Applicability of p (2014) Sharifuddin (2014) Yao and Chang (2014) technology; Acceptability by society; Affordability of energy resources × × p s p s × o × z 2 o × o 1 o 20 s Appendices Appendix C. The Energy Trilemma and Singapore's energy profile C.1 Introduction At the national or supra-national level, it is not sufficient to deal with energy security in isolation of other important energy issues. A more holistic view calls for policies to address multiple competing energy goals, such as the concept of the “energy trilemma” (WEC, 2012). Energy trilemma is defined as balancing the trade-offs between three major energy goals, namely energy security, economic competitiveness, and environmental sustainability. Figure C.1 shows the energy trilemma, in which there are overlapping portions between energy security and the other two energy goals. For example, for a country to be economically competitive, it has to ensure that energy costs are kept reasonably low for businesses. A country would also prefer a secure and clean energy source. Some conflicts within these relationships become obvious upon further examination. Figure C.1 The energy trilemma From the diagram, it can be observed that energy security shares certain common elements with the other two dimensions. For example, energy prices and infrastructure costs fall within the intersection of energy security and economic competiveness, whereas energy conservation and efficiency and the transition to cleaner low carbon energy sources fall within the intersection of energy security and environmental sustainability. Hence, the formulation of energy policies is not straightforward and requires the balancing of different benefits and impacts. 96 Appendices C.2 Energy Security and Economic Competitiveness There is usually a tradeoff between increasing energy security and maintaining economic competiveness, especially when additional investments are needed to improve current energy sources. For instance, to increase energy security, a country with cheap coal deposits would want to rely on this indigenous resource at the expense of environmental sustainability. This coal resource would be high in energy security as it is cheap and abundant, but if carbon capture and storage is not implemented, the high carbon emissions would entail high environmental costs. Although it has not been done at a commercial scale yet, carbon capture and storage entails lower energy utilization from burning of the fuel and as additional costs in running these facilities. Apart from coal, efforts to diversify energy sources to include more renewables may also run against the two other goals. For instance, countries which have large hydroelectric potential may want to utilize hydropower to reduce the dependence on fossil fuels. However the possible environmental degradation (Sovacool, 2013b) and huge capital costs may come into conflict with the economic competitiveness and environmental sustainability goals. On the other hand, for energy importers which choose to increase the diversity of suppliers or trade routes, this may result in some economic tradeoffs such as buying less from each supplier or paying more to acquire imports from further away to reduce the dependence on any one source. C.3 Energy Security and Environmental Sustainability On the environmental sustainability front, the promotion of renewables as an alternative to conventional energy sources to increase energy security may pose other problems. While it is true that renewables will reduce the need for energy imports and are generally more sustainable than conventional energy sources, it is plagued by issues such as intermittency and high operating costs. Biofuels may even bring about new issues such as water and food security. Thus, without consideration of such issues and development of feasible solutions to the unintended consequences of renewables, they may not seem as attractive as what proponents of renewable energy sources make it out to be. For energy importers, diversification is seen as one of the foundations of energy security. With greater diversification, the impact of a disruption from any one energy source can be mitigated by increased imports from other sources. However, diversification can come with an environmental cost too. For example, to reduce the dependence on imported oil or natural gas, countries may turn to indigenous coal supply to increase diversity and energy security. This will lead to increased carbon emissions. Based on the indicators used in the studies surveyed, 97 Appendices instances in which increasing the energy security in terms of diversification leads to lower environmental sustainability can be identified. C.4 Implications of the Energy Trilemma These relationships between the various energy goals also highlight the broader sustainability issue. Sustainability should be the overarching principle when evaluating energy goals and policies. This is due to the fact that energy policies which may lead to high energy security in the short run may not be sustainable in the long run. However, sustainable energy policies need to fulfil the prerequisite condition of having energy security. Therefore, in policy discussions, energy security should not be considered in isolation but in the larger context of the energy trilemma and sustainability to avoid formulating short-sighted policies which address energy security in the short run but contribute to longer-term problems. Figure C.2 is an influence diagram of possible interactions among different factors as a result of energy policies. By increasing the reliance on fossil fuels, this would lead to higher carbon emissions that would in turn lead to indirect risks such as increasing the pace of climate change. This reiterates the point that a systems approach is needed to formulate energy policies by analysing the downstream effects of new energy policies. Figure C.2 Influence diagram for energy policies C.5 Singapore's energy profile Singapore is a small country, its land area measures a mere 716.1 km2 and the total population is just 5.39 mil (Singstat, 2014). However, it is an economic powerhouse with one of the highest GDP per capita in the world at SGD 68,541 in 2013, with external trade amounting to SGD 76.4B in the year ending February 2014 (Singstat, 2014). 98 The goods producing Appendices industries (inclusive of manufacturing and construction) made up 31.0% of Singapore’s GDP in 2013, while services and others amounted to 63.2% and 5.8% respectively (Singstat, 2014). Singapore mainly depends on exports to satisfy its energy needs. The government has recognised that Singapore is “alternative energy disadvantaged” with limited access to renewable sources such as hydroelectric, geothermal, wind and solar energy (NCCS, 2012). Nonetheless, Singapore is a major oil refining centre with a refinery output of 53.713.0 ktoe in 2011 (EMA, 2013a). Electricity generation is mainly power by natural gas imported from Malaysia and Indonesia which amounted to 8.1 Mtoe in 2012 (EMA, 2013a). Singapore has also sought to increase the diversity of its natural gas imports by constructing an LNG terminal that commenced commercial operations in May 2013 (EMA, 2013b). With this new facility Singapore is able to import natural gas from around the world and there are plans to expand the terminal and storage facilities in the future to further safeguard Singapore’s energy supply. The TPES for Singapore in 2011 was 33.4 Mtoe and TFC was 24.3 Mtoe (IEA, 2013a). For electricity generation, the share of petroleum products used has been increasingly substituted by natural gas. In 2012, the share fuel was petroleum products – 12.3%, natural gas – 84.3% and others – 3.4%. Others mainly comprises of waste to energy operations and pilot solar energy projects. The consumption of electricity amounted to 42.6 TWh in 2012, with the industrial-related, commerce and service-related, transport-related, household and others sectors consuming 39.8%, 37.9%, 5.6%, 15.6% and 1.1% respectively. C.6 Singapore Energy policies and targets Singapore has implemented numerous energy policies in order to increase energy security and economic competiveness and to reduce the environmental footprint of the energy system. These policies have been published in several government publications such as the Singapore Green Plan 2012 (ENV, 2002; MEWR, 2006), the National Energy Policy Report (MTI, 1997), the Singapore Sustainable Development Blueprint (MEWR, 2009) and the National Climate Change Strategy 2012 (NCCS, 2012). Some policies were also report in Singapore’s communications to the UNFCCC. This section highlights various policies that were implemented in six sectors. Buildings The flagship BCA Green Mark Scheme was introduced by the Building and Construction Authority (BCA) in 2005 to increase the environmental sustainability of buildings. This was followed by the first Green Building Masterplan in 2006, which focused on greening buildings and a second on in 2009 which placed greater emphasis on greening existing 99 Appendices buildings. In 2010, it was announced that higher Green Mark Standards was part of the Land Sales Conditions for Strategic Growth Areas, requiring developers to construct more sustainable buildings in these districts. The Building Retrofit Energy Efficiency Financing (BREEF) scheme was introduced in 2011 to encourage building owners with limited financial resources to increase energy efficiency through retrofits by offering financing. In 2013, submission of energy consumption and energy-related building data was made compulsory. Households Energy labelling was first introduced in 1999 through the green labelling scheme to increase awareness of higher energy efficiency electrical appliances among consumers. This was upgraded to the Mandatory Energy Labelling Scheme (MELS) in 2008. In 2011, the National Environment Agency went even further and instituted Minimum Energy Performance Standards (MEPS) for household air conditioners and refrigerators. The MEPS were tighten in 2013 and are set to extend to lighting and more appliances in 2014. Industry In the industrial sector, three main policies were introduced: audits, energy efficiency and human resource development. For auditing, the Energy Audit Scheme was introduced in 2002, this was upgraded in 2013 with the enactment of the Energy Conservation Act which mandated large energy users to monitor their energy usage and implement energy management systems. On the energy efficiency front, many schemes such as the Energy Efficiency Improvement Assistance Scheme (EASe/2005), Grant for Energy Efficiency Technologies (GREET/2008), Design for Efficiency Scheme (DfE/2008) and the Energy Efficiency National Partnership (2010) sought to improve energy efficiency in the industrial sector and reduce energy usage. Lastly, the government has taken steps to improve the capability of energy management companies and professionals through programmes such as the Energy Service Companies (ESCO) Accreditation Scheme in 2005, the Singapore Certified Energy Manager (SCEM) course in 2006 and the Specialist Manpower Programme in Clean Energy in 2008. These courses and programmes have helped to groom energy professionals to support new energy efficiency policies and legislation. Power generation The government moved to corporatized electricity and gas operations in 1995 on grounds of improving operating efficiencies of these entities. In 2001, the Energy Market Authority was formed and the National Energy Market of Singapore (NEMS) was established two years later in 2003. In order to diversify fuel supplies, further liberalised energy markets in 2010. Apart from deregulating, the electricity sector has undergone several changes such as the transition 100 Appendices from oil-fired to gas-fired power plants starting from 2000. From then on, natural gas has become the dominant fuel in the fuel mix for electricity generation. This has led the government to announce plans for an LNG terminal in 2006 to diversify our natural gas supplies. The plant was completed in 2013 and new plans have been announced to expand its capacity and storage facilities further. Research On the research front, three main areas can be identified: innovation programmes, institutional capabilities and technology test-bedding. The programmes include the Innovation for Environmental Sustainability fund and the Singapore Initiative on New Energy Technology (SINERGY) introduced in 2001. Apart from such schemes, several research institutes and centres have been established. These include the Energy Studies Institute, the Clean Energy Research Centre in Temasek Polytechnic and the Clean Energy Programme Office in 2007 and the Solar Energy Research Institute of Singapore (SERIS) in 2008. Technology testbedding have been funded through the Clean Energy Research and Test-bedding Programme (CERT) that was introduced in 2007. In addition, there have been programmes such as the Solar Capability Scheme and the HDB Solar Leasing scheme that explore the potential of solar power in Singapore and the wider region. Transport Singapore has introduced several policies to reduce congestion and discourage private car ownership, while promoting public transport as a viable alternative. Congestion policies dated back to 1975 with the introduction of the Area Licensing Scheme which required car owners to purchase a sticker to enter restricted areas during the day. This was upgraded to the Electronic Road Pricing (ERP) scheme in 1998 which allowed cars to pay the surcharge electronically through their in-car units, this allowed the scheme to be expanded to major highways and increased the flexibility to allow for multi-tiered pricing corresponding to the congestion level. The private vehicle market has also been constrained by the Vehicle Quota System (VQS) introduced in 1990. Car owners are now required to bid for a Certificate of Entitlement (COE) in order to own a vehicle. This has led to a substantial increase in the cost of owning a vehicle. Additional, Park-and-Ride schemes were also introduced in the same year to reduce the number of vehicles entering congested areas such as the Central Business District. To increase the uptake of alternative fuel vehicle cars, the Green Vehicle Rebate was introduced in 2001 for natural gas, hybrid, electric and fuel cell vehicles. This has since been replaced by the Carbon Emissions-based Vehicle (CEV) Scheme that incentives car owners to select vehicles that generated lower carbon emissions. Vehicle efficiency has also been improved with schemes such as the Voluntary Fuel Economy Labelling Scheme introduced in 101 Appendices 2003 to help prospective car owners select more fuel efficiency vehicles. This scheme was upgraded to make fuel economy labelling mandatory in 2009. Singapore has also explored alternative transport fuel solutions such as the trial of diesel hybrid buses conducted in 2010 and the electric vehicle taskforce set up in 2011. C.7 Policies to improve Singapore's energy security In a speech at the opening of Singapore's first LNG terminal, the prime minister of Singapore, Lee Hsien Loong, outlined Singapore's vulnerabilities and strategy to improve its energy security (Lee, 2014). The vulnerabilities include not possessing any energy resources and having to fully import our energy needs, thus Singapore is subject to supply and price risks. The strategy to mitigate this is multi-pronged, this includes managing energy demand and diversifying energy imports. The energy markets has also been structured in such a way to increase competition and efficiency, driving down costs to consumers. There has also been schemes to further develop energy infrastructure and manpower capability in the power sector. Before the completion of the LNG terminal, Singapore's whole natural gas supply was supplied by Malaysia and Indonesia, which are experiencing higher domestic demand for their natural gas reserves. With the addition of the LNG terminal, Singapore has greatly increase the number of potential suppliers of natural gas, enhancing our energy security. Increased storage capacity and a second LNG terminal are in the pipeline to further increase Singapore's energy security. The diversification of energy supplies also includes exploring new energy options like solar energy. Singapore has invested significantly into solar energy research and pilot testing of these technologies in housing estates. Apart from solar, Singapore does not rule out any other alternative energy options and may adopt such technologies as long as they are economical and technically feasible. The Ministry of Trade and Industry (MTI) has also framed Singapore's energy policies as a balance of three energy policy objectives known as the energy trilemma: economic competitiveness, energy security and environmental sustainability. The Singapore's National Energy Policy Framework consists of five key strategies: (i) diversify energy supplies, (ii) enhance infrastructure and systems, (iii) improve energy efficiency, (iv) strengthen the green economy and (iv) pricing energy right (MTI, 2011). The Economic Strategies Committee (ESC) - subcommittee on ensuring energy resilience and sustainable growth proposed several recommendations based on the five strategies listed above (ESC, 2010). On diversifying energy supplies, the subcommittee recommended allowing entry of new energy options on a market basis, developing renewable energy sources and studying the feasibility of the nuclear energy options and developing 102 Appendices expertise in this area. In enhancing infrastructure and systems, it was recommended that Singapore should invest in critical energy infrastructure ahead of demand and to develop Jurong Island as an energy-optimised industrial cluster. Recommendations to increase energy efficiency include promoting energy efficiency for buildings, industry and in homes and to support clean and efficient technologies in transportation. It was also proposed that energy should be established as a key national R&D priority and capabilities be built to strengthen Singapore's green economy. Government procurement should also apply a green lens to kickstart industries producing local energy-efficient products. Lastly, energy should be priced to reflect its total cost to raise awareness and promote energy efficiency and conservation. C.8 Singapore's energy policies and the energy trilemma Singapore's energy policies can be can be classified under a 7 'R' framework: i. Reap opportunities ii. Research iii. Reward and recognise iv. Rebate v. Regulate vi. Reduce vii. Restrict In reaping opportunities, the government engages the energy challenge to identify ways to grow Singapore's economy through either new technologies or economic opportunities. For research, funds are provided to develop new technologies and innovation in the various sectors such as power, building and transport. In reward and recognise, commercial and social entities like schools are rewarded and recognised through various awards and grants to promote energy conservation practices and energy efficiency. Rebates are given to vehicle owners and companies that adopt lower emission vehicles or invest in higher energy efficiency. The regulation of energy markets have helped to increase competition of energy markets and reduce energy costs in Singapore. There have been campaigns to reduce energy consumption through improving energy efficiency and changing people's mindsets to encourage energy conservation and efficiency. Restriction sets the minimum standards that have to be achieved and bans machines and vehicles that do not meet these standards. Singapore's past energy policies have been classified under these 7 'R's and their contribution to the energy trilemma is presented in Appendix D. 103 Appendices C.9 Conclusion The specific effects of certain plans to improve energy security may have on the different implications on the energy trilemma. In general, energy conservation poses the least conflict with both the energy security and economic competiveness goals. Through reducing energy use and costs, they increase energy security and economic competitiveness. If substantial initial investments are required, increasing energy efficiency may also present a trade-off between environmental sustainability and economic competitiveness. In such cases, a thorough cost-benefit analysis is needed to ensure that the benefits outweigh the costs. Singapore's energy profile is rather unique as it does not have much natural fossil fuel resources but it is a major oil refining hub. Its small land area limits its ability to tap into other alternative and renewable energy sources. The government has formulated and implemented a wide range of policies to tackle the energy problem and improve energy security. Based on the performance of the electricity system, it can be said that policies have largely been effective in keeping the system's reliability high and costs affordable without resorting to costly energy subsidies. The next step would be to measure Singapore's past energy security performance to gain an insight on historical developments and direct attention to areas which can be improved. This would lead to higher energy security in the future. 104 Appendices Table C.1 Singapore energy policies 7 'R's Policy/ Initiative Year Reap opportunities National Climate Change Committee (N3C) National Climate Change Strategy Strengthen Green Economy Move from oil-fired to gas-fired power plants Plans for LNG Terminal NExBTL Renewable Diesel Refinery Biomass clean coal cogeneration plant Widen lead in oil industry Expand range of trading products to include LNG, biofuel and CO2 emissions credits CNG for public transport 2006 2007 2010 2000 2006 2010 MND Research Fund for Built Environment EDB 17m Clean Energy Research and Test-bedding Programme (CERT) Solar: HDB Solar Test Bed, Solar Leasing, Tengeh Reservoir floating PV project Innovation for Environmental Sustainability Fund (20 Million) One-North Singapore Initiative in Energy Technology (Sinergy): Microgrid and Command & Control Facility A*STAR Energy Technology R&D Programme NRF R&D in Clean Energy (S$170m) EMA 5m Market Development Fund Technology Innovation and Development Scheme (TIDES) [LTA and EDB] Clean Energy Programme Office (CEPO) A*STAR and Institute of Materials Research and Engineering: Novel materials for solar cells Fuel cell cars Electric Vehicle Taskforce SINERGY Nuclear: Prefeasibility study Energy Studies Institute Energy Efficiency National Partnership BCA Green Mark Scheme/ Incentive Scheme EnergySmart schemes: Energy Sustainability Unit (ESU) in NUS and NEA Building Retrofit Energy Efficiency Financing (BREEF) Scheme Public sector taking the lead Energy Efficiency Improvement Assistance Scheme (EASe) Singapore Certified Energy Manager (SCEM) 2006 2007 Research 105 Reward/ Recognise Sector1 Energy Trilemma2 B H I T × × × × × × × × × × × × × × × × × × 2002 2005 2006 × × × × × × × × × × × × × ESS × 2004 2011 2001 2010 ES × × × × × × × × × 2005 2007 2011 EC × Appendices 106 Grant for Energy Efficiency Technologies (GREET) Design for Efficiency Scheme (DfE) Energy Service Companies (ESCO) Accreditation Scheme Green Vehicle Rebate: Natural gas, Hybrid, Electric, Fuel Cell Rebate Investment Allowance Tax Scheme Pricing Energy Right Regulate National Electricity Market of Singapore Enhance Infrastructure and Systems Liberalise energy markets to diversify fuel supplies Energy Market Authority National Energy Efficiency Committee Reduce Energy Efficiency Programme Office (E2PO) Energy Efficient Singapore (E2 Singapore) 10% Energy Challenge Mandatory Energy Labelling scheme (MELS) Green labelling scheme Energy Labelling Scheme Energy Audit Scheme Electronic Road Pricing (ERP) Voluntary fuel economy labelling Encourage environmentally-friendly ways of transportation (e.g. cycling, green car sharing) Increase awareness of fuel efficient driving habits UNFCCC pledge 16% from 2020 BAU levels in event of legally binding global agreement Implementation of Pollution Standards Index (PSI) Residential Envelope Transmittance Value Standard Restrict Green mark certified for all new buildings and retrofit for above >2000m2 GRA Higher Green Mark Standard for Land Sales Conditions at Strategic Growth Areas Envelope Thermal Transfer Value (ETTV) Minimum Energy Performance Standard (MEPS) Vehicle Quota System (VQS) Euro I Emission Standards for diesel vehicles Chassis Dynamometer Smoke-Test (CDST) for diesel-driven vehicle All Diesel Driven Vehicles in Singapore to use Ultra Low Sulphur Diesel Euro IV Emission Standards for new diesel vehicles 1 B - Buildings, H - Households, I - Industry, T - Transport 2 2008 2001 2010 2003 2010 2010 2001 2001 × × × × 2008 2008 × × × × × × × × × × × × × × × × × × × × × × × × × 1998 2003 × × × × 2009 2008 2008 2011 1990 1997 2000 2005 2006 EC - Economic competitiveness, ES - Energy Security, ESS - Environmental Sustainability, - Benefit expected, - Cost expected × × × × × × × × × × Appendices Appendix D. Scenario projections for SESI Table D.1 Business-as-Usual scenario (BAU) for Singapore Energy Security Index Source: Own calculations incorporating projections from IEA World Energy Outlook 2012 Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 61.0 56.5 52.3 48.4 45.0 42.1 Price of crude oil 98.28 145.6 157.7 166.8 173.5 178.3 Price of natural gas 9.902 13.8 14.9 15.9 16.5 16.8 Electricity prices for residential customers 21.3 28.1 29.9 31.6 32.6 33.2 Energy cost as a percentage of manufacturing operating cost 5.44 5.00 5.00 5.00 5.00 5.00 Energy import dependence (% of TPES) 97.7 97.5 97.5 97.5 97.5 98 Fuel mix of TPES 0.481 0.442 0.412 0.381 0.381 0.381 Ratio of domestic oil consumption to refinery throughput 16.5 16.5 16.5 16.5 16.5 16.5 Strategic petroleum reserve 90 90 90 90 90 90 Energy Technology diversity in electricity generation 0.489 0.489 0.489 0.489 0.489 0.489 Supply Chain Electricity load factor 52.36 52.4 52.4 52.4 52.4 52.36 System Average Interruption Duration Index (SAIDI) 0.76 0.76 0.76 0.76 0.76 0.76 System Average Interruption Frequency Index (SAIFI) 0.04 0.04 0.04 0.04 0.04 0.04 Total final energy consumption (TFEC) per capita 1.83 1.96 2.07 2.15 2.22 2.27 Electricity generation efficiency 41.3 41.3 41.3 41.3 41.3 41.3 TFEC/GDP ratio 32.38 30.01 27.77 25.72 23.90 22.34 Land transport fuel diversity 0.884 0.850 0.850 0.850 0.850 0.850 Energy-related CO2 emissions per capita 8.56 9.39 9.92 10.33 10.64 10.86 Carbon intensity (Emission/GDP) 0.152 0.144 0.133 0.123 0.115 0.107 Carbon factor (CO2/TPES) 2.55 2.55 2.55 2.55 2.55 2.55 Share of non-fossil fuel in TPES 2.31 2.3 2.3 2.3 2.3 2.3 Modal share of public transport 59 63 67 71 75 75 Economic 107 Environmental Appendices Table D.2 New Policies Scenario (NPS) for Singapore Energy Security Index Source: Own calculations incorporating projections from IEA World Energy Outlook 2012 Dimension Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 61.0 56.5 50.3 44.8 40.1 36.0 Price of crude oil 98.28 142.7 147.0 149.9 152.0 153.7 Price of natural gas 9.902 13.5 14.1 14.6 15.0 15.4 Electricity prices for residential customers 21.3 27.3 28.3 29.1 29.7 30.3 Energy cost as a percentage of manufacturing operating cost 5.44 5.00 4.75 4.50 4.25 4.00 Energy import dependence (% of TPES) 97.7 97.5 97.5 97.5 97.5 97.5 Fuel mix of TPES 0.481 0.442 0.412 0.381 0.381 0.381 Ratio of domestic oil consumption to refinery throughput 16.5 16.5 16.5 16.5 16.5 16.5 Strategic petroleum reserve 90 90 90 90 90 90 Energy supply Technology diversity in electricity generation 0.489 0.489 0.489 0.489 0.489 0.489 chain Electricity load factor 52.36 52.36 52.36 52.36 52.36 52.36 System Average Interruption Duration Index (SAIDI) 0.76 0.76 0.76 0.76 0.76 0.76 System Average Interruption Frequency Index (SAIFI) 0.04 0.04 0.04 0.04 0.04 0.04 Total final energy consumption (TFEC) per capita 1.83 1.96 2.04 2.09 2.12 2.14 Electricity generation efficiency 41.3 41.8 42.3 42.8 43.3 43.8 TFEC/GDP ratio 32.38 30.01 26.72 23.80 21.27 19.12 Land transport fuel diversity 0.884 0.850 0.850 0.850 0.850 0.850 Energy-related CO2 emissions per capita 8.56 9.11 9.44 9.65 9.75 9.77 Carbon intensity (Emission/GDP) 0.152 0.140 0.124 0.110 0.098 0.088 Carbon factor (CO2/TPES) 2.55 2.47 2.46 2.45 2.44 2.43 Share of non-fossil fuel in TPES 2.31 2.3 2.3 2.3 2.3 2.3 Modal share of public transport 59 63 67 71 75 75 Economic 108 Environmental Appendices Table D.3 450 Scenario (450S) for Singapore Energy Security Index Source: Own calculations incorporating projections from IEA World Energy Outlook 2012 Dimension Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 61.0 56.5 50.6 44.2 38.8 34.2 Price of crude oil 98.28 141.8 139.4 134.2 128.8 123.0 Price of natural gas 9.902 13.4 13.3 12.8 12.3 11.8 Electricity prices for residential customers 21.3 28.1 29.4 31.1 31.6 28.2 Energy cost as a percentage of manufacturing operating cost 5.44 5.00 4.85 4.70 4.55 4.40 Energy import dependence (% of TPES) 97.7 97.5 97.0 96.0 95.0 80.0 Fuel mix of TPES 0.481 0.43 0.40 0.37 0.33 0.21 Ratio of domestic oil consumption to refinery throughput 16.5 16.5 16.0 15.0 14.0 13.0 Strategic petroleum reserve 90 90 90 95 95 100 Energy supply Technology diversity in electricity generation 0.489 0.4886 0.4886 0.4646 0.4422 0.3438 chain Electricity load factor 52.36 51.0 50.0 49.0 48.0 40.0 System Average Interruption Duration Index (SAIDI) 0.76 0.76 0.76 0.76 0.76 0.76 System Average Interruption Frequency Index (SAIFI) 0.04 0.04 0.04 0.04 0.04 0.04 Total final energy consumption (TFEC) per capita 1.83 1.83 1.96 2.05 2.11 2.15 Electricity generation efficiency 41.3 41.3 41.3 41.3 41.3 41.3 TFEC/GDP ratio 32.38 30.01 26.85 23.47 20.58 18.14 Land transport fuel diversity 0.884 0.869 0.833 0.799 0.767 0.735 Energy-related CO2 emissions per capita 8.56 8.11 8.74 9.12 9.25 8.08 Carbon intensity (Emission/GDP) 0.152 0.124 0.115 0.101 0.088 0.067 Carbon factor (CO2/TPES) 2.55 2.54 2.53 2.50 2.43 2.06 Share of non-fossil fuel in TPES 2.31 2.5 3.0 4.0 5.0 20.0 Modal share of public transport 59 65 70 75 78 80 Economic 109 Environmental Appendices Appendix E. Banding results for projections Table E.1 Banding results for BAU Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 4 4 4 4 4 4 Price of crude oil 1 0 0 0 0 0 Price of natural gas 2 1 1 0 0 0 Electricity prices for residential customers 2 0 0 0 0 0 Energy cost as a percentage of manufacturing operating cost 2 2 2 2 2 2 Energy import dependence (% of TPES) 0 0 0 0 0 0 Fuel mix of TPES 2 2 2 2 2 2 Ratio of domestic oil consumption to refinery throughput 4 4 4 4 4 4 Strategic petroleum reserve 2 2 2 2 2 2 Energy supply Technology diversity in electricity generation 1 1 1 1 1 1 chain Electricity load factor 3 3 3 3 3 3 System Average Interruption Duration Index (SAIDI) 4 4 4 4 4 4 System Average Interruption Frequency Index (SAIFI) 4 4 4 4 4 4 Total final energy consumption (TFEC) per capita 4 4 3 3 3 3 Electricity generation efficiency 3 3 3 3 3 3 TFEC/GDP ratio 4 4 4 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 4 4 4 4 4 4 3 3 3 3 3 3 Share of non-fossil fuel in TPES 0 0 0 0 0 0 Modal share of public transport 3 3 3 4 4 4 Dimension Economic 110 Land transport fuel diversity Energy-related CO2 emissions per capita Environmental Carbon intensity (Emission/GDP) Carbon factor (CO2/TPES) Appendices Table E.2 Banding results for NPS Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 4 4 4 4 4 4 Price of crude oil 1 0 0 0 0 0 Price of natural gas 2 1 1 1 0 0 Electricity prices for residential customers 2 0 0 0 0 0 Energy cost as a percentage of manufacturing operating cost 2 2 3 3 3 3 Energy import dependence (% of TPES) 0 0 0 0 0 0 Fuel mix of TPES 2 2 2 2 2 2 Ratio of domestic oil consumption to refinery throughput 4 4 4 4 4 4 Strategic petroleum reserve 2 2 2 2 2 2 Energy supply Technology diversity in electricity generation 1 1 1 1 1 1 chain Electricity load factor 3 3 3 3 3 3 System Average Interruption Duration Index (SAIDI) 4 4 4 4 4 4 System Average Interruption Frequency Index (SAIFI) 4 4 4 4 4 4 Total final energy consumption (TFEC) per capita 4 4 3 3 3 3 Electricity generation efficiency 3 3 3 3 3 3 TFEC/GDP ratio 4 4 4 4 4 4 0 0 0 0 0 0 0 0 0 0 0 0 4 4 4 4 4 4 3 3 3 3 3 3 Share of non-fossil fuel in TPES 0 0 0 0 0 0 Modal share of public transport 3 3 3 4 4 4 Dimension Economic 111 Land transport fuel diversity Energy-related CO2 emissions per capita Environmental Carbon intensity (Emission/GDP) Carbon factor (CO2/TPES) Appendices Table E.3 Banding results for 450S Indicator 2010 2015 2020 2025 2030 2035 Energy intensity 4 4 4 4 4 4 Price of crude oil 1 0 0 0 0 0 Price of natural gas 2 1 1 1 1 1 Electricity prices for residential customers 2 0 0 0 0 0 Energy cost as a percentage of manufacturing operating cost 2 2 3 3 3 3 Energy import dependence (% of TPES) 0 0 0 0 0 0 Fuel mix of TPES 2 2 2 2 2 3 Ratio of domestic oil consumption to refinery throughput 4 4 4 4 4 4 Strategic petroleum reserve 2 2 2 2 2 2 Energy supply Technology diversity in electricity generation 1 1 1 1 1 2 chain Electricity load factor 3 3 3 3 3 3 System Average Interruption Duration Index (SAIDI) 4 4 4 4 4 4 System Average Interruption Frequency Index (SAIFI) 4 4 4 4 4 4 Total final energy consumption (TFEC) per capita 4 4 4 3 3 3 Electricity generation efficiency 3 3 3 3 3 3 TFEC/GDP ratio 4 4 4 4 4 4 0 0 0 1 1 1 0 0 0 0 0 0 4 4 4 4 4 4 3 3 3 3 3 3 Share of non-fossil fuel in TPES 0 0 0 0 1 4 Modal share of public transport 3 3 4 4 4 4 Dimension Economic 112 Land transport fuel diversity Energy-related CO2 emissions per capita Environmental Carbon intensity (Emission/GDP) Carbon factor (CO2/TPES) [...]...List of Abbreviations and Acronyms ktoe 1000 tons of Oil Equivalent LNG Liquefied Natural Gas LTA Land Transport Authority, Singapore MEWR Ministry of Environment and Water Resources, Singapore MTI Ministry of Trade and Industry, Singapore NCCS National Climate Change Secretariat, Singapore NEA National Environment Agency, Singapore NPS New Policies Scenario NPTD National Population and Talent Department,... environmental dimensions Data availability and quality is another determining factor In ERIA (2012), which deals with energy security in East Asian countries, data are not available for some of the indicators for a number of countries 2.8 Temporal versus spatial studies Temporal and spatial are two main types of studies In the former, energy security is evaluated for two or more years and changes over time can... Singapore' s energy security performance This would help to provide a tool to track and control Singapore' s energy security and enable a fuller analysis to facilitate policymaking 1.3 Thesis structure and contribution This thesis focuses on both quantitative and qualitative analysis of Singapore' s energy security The organization of this thesis is as follows Chapter 2 is a literature review of energy security. .. standardization The min-max method involves taking the maximum and minimum values observed to form a scale, following which other values are placed with reference to these values An advantage of this method is its ability to gauge performance based on the best and worst performance, while a drawback is the need to recalibrate when additional data points are added The distance to reference method measures... emissions to reduce the pace of climate change Although energy security is a highly subjective notion, increasingly there are more studies that have attempted to measure energy security of a country or region by means of indicators and indexes This allows energy security to be tracked and monitored This can also lead to the formulation of new energy policies to arrest any decline in energy security. .. sensitivity of the index A basket of 10 to 25 indicators looks reasonable, as this translates into an average weight ranging from 4% to 10% for each indicator (assuming all the indicators are assigned equal weight) In practice, the appropriate or “ideal” number will depend on, among other factors, the scope and complexity of a 7 In Table 2, Sovacool (2011) listed 200 energy security indicators; however these... while a multi-country study will deal with issues that are of general concern For simplicity, we shall refer to the primary concerns that a study takes into account in index construction as “specific focused areas” (SFAs) We have made an attempt to identify SFAs based on the indicators and indexes in the surveyed studies Five such areas can be identified and we shall refer to them as SFA-1 to SFA-5,... climate change and sustainability, the relevant facets of energy security are expected to be reshaped There has also been increased interest in quantifying energy security using indicators and indexes Various studies have proposed a wide variety of energy security indexes, either to compare the performance among countries or to track 4 Literature Review Chapter 2 changes in a country’s performance... are to review the trends in the definition of energy security and the construction of energy security indexes in a comprehensive manner and also to propose an energy security index for Singapore, based on existing work in this area and taking into consideration its energy profile and the set of problems it faces in securing its energy supply The indicator and index approach is adopted to quantify Singapore' s... Generally, in these studies, a basket of indicators are first identified based on some specific considerations or theoretical framework With the requisite data collected, these indicators are normalised, assigned weights, and aggregated to give one or more composite energy security indexes Again, a quick review will show that there are large variations among studies in the choice of indicators and how a